Last Week at Trade Extensions ‘Redefining eSourcing’ User Conference

Last week the Trade Extensions user conference took place in Atlanta, Georgia, US. Redefining eSourcing’ focused on the future of sourcing and revealed some of Trade Extensions’ customers’ experiences of how the sourcing optimisation technology had transformed their sourcing processes.

Experts from some of the world’s biggest companies talked about their use of the software, including industry experts from Maersk, Walmart and Home Depot, and our own Jason Busch was there to report on the discussions. His live dispatches can be found herehere and here for those of you who couldn’t attend but share a keen interest in optimised sourcing (or market-informed sourcing, optimisation, advanced sourcing, complex sourcing, or however you like to refer to it). Jason also follows up with an in-depth two-parter “Getting the Most from Sourcing Optimization (Part 1): Lessons From Leaders” - that is on the subscription part of the site, but worth signing up for if you want more targeted, deeper analysis.

So here is a roundup of some of the highlights from the event:

Ayush Sharma, director of client services in the Americas for Trade Extensions, provided a number of actual case studies of how the platform had been used to consolidate sourcing and supply chain considerations in the same bid. Using an example of a pair of jeans in the supply chain (but it could be almost any commodity) he explained how they start off in the cotton field, then follow these steps: the commodity is harvested and rolled into a large bundle; it is cleaned and processed — 60% of raw cotton is dirt; it is then shipped to a conversion facility and converted into denim cloth; this is then shipped to the production facility that makes the jeans; they are shipped to a single distribution centre (or multiple centres) and the retail store (if there is one).

All of these functions are managed independently from a sourcing and supply chain perspective, involving a raw material team buying the cotton, a distribution/logistics group handling the sea, truckload, or air freight (as applicable), a warehousing team, among others. However, he suggests that there are significant advantages to be gained from combining these efforts. “Why not load them within the confines of a single project” and gain the value from the virtual “vertical integration” of the supply chain.

Jason notes: “by analyzing these elements together, it becomes possible to optimize for total cost of ownership across the supply chain factoring into account raw material prices, logistics costs, inventory holding costs, working capital, shipping costs and capacity utilization (from a production standpoint) — just to name select inputs driving total cost. Yet this scenario remains as likely as most of us are to fit into a pair of real skinny jeans. But not because technology is incapable of enabling it. Most organizations are just not ready to think about the supply chain itself being defined by sourcing.” Read more here.

The next release of the Trade Extensions platform (TESS 6.0) is coming by early summer, and co-founder Professor Arne Andersson previewed the pre-release software in a live demo. The entire user experience is transformed, he promised, and Jason will be writing more on that shortly. For now, he focused on what the developer calls “apps” but are essentially as Jason describes: ‘templates on steroids.’ “Yet they’re simple and powerful at the same time,” he says.

“In the 6.0 release … these “apps” are template projects that are stored in an ‘app’ list that typically contain a guide. It’s possible to associate an ‘app’ with a given type of category, event format or bid type … Examples of very simple apps include specialized auction formats such as Japanese auctions … Or take the example of a Dutch reverse auction … These are examples of basic apps that Trade Extensions has created. But they can get much more complicated, factoring in formulas, feedback and bidding rules for complex-sourcing-meets-supply-chain type projects (or category-specific projects such as logistics, packaging or contingent labor). Or, in simple cases, a centralized procurement organization could configure “apps” for enabling business users to run small-scale sourcing optimization events without even having to know how optimization works — perhaps even in the context of a P2P suite.”

“In our view,” he says, “the power of whatever you want to call them will really begin to show itself when it comes to pushing optimization to users who have never been exposed to them before (and want a “turnkey” for their needs).”

And in his final post from the day, he explains that several philosophical discussions took place about sourcing, including a panel on what it might mean to adopt an open source — or “Wikinomics” — sourcing model. But that’s a subject for another day.

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