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2016 Sourcing Report

Expanding Strategic Control Over Spend with Advanced Electronic Sourcing (eSourcing) Software

August 25, 2016      

Underwritten in part by eBid Systems, SciQuest, and Xeeva.

Featuring insights on…

    • Current Market Trends in Sourcing Processes Among North American Organizations
    • The Benefits of Sourcing Process Automation
    • Features and Functionalities of eSourcing Software
    • Sourcing Transformation Case Studies Featuring Several Leading Global Companies

Table of Contents

Introduction
Sourcing Today
Features and Functionality
Sourcing Transformation Possibilities
Conclusion
eBid Systems
Case Study: PASSHE
SciQuest
Case Study: Maersk Group
Xeeva

Introduction

Sourcing is a procurement process designed to obtain goods and services at the best possible prices. More than small-value, indirect procurement processes, efficient sourcing depends upon strategy. It entails turning a transaction with a supplier into a long-lasting business relationship that has numerous benefits for the company’s supply chain.

Traditional sourcing involves multi-touch, multi-stage projects run by an organization’s sourcing team, often involving the same pool of suppliers and the same engagement strategies year after year. Using this method, it can take months to assess purchasing needs, build sourcing plans, conduct market research, identify and evaluate suppliers, and select the most suitable option—with plenty of room for error throughout the process. Manual sourcing procedures often suffer from limited process transparency, faulty supplier lists, and inconsistent data management, all of which prevent purchasing professionals from making the best buying decisions.

Today, competitive organizations are abandoning traditional sourcing methods for a more streamlined approach. With electronic sourcing (eSourcing) software, organizations can consolidate widespread, time-extensive sourcing operations using one secure electronic platform that supports automated, transparent, and interactive processes. eSourcing allows organizations to procure goods at competitive prices from premium suppliers by facilitating open sourcing events, often involving supplier scoring and reverse auctions. These solutions also help organizations replace existing, un-advantageous procurement engagements with more cost-effective and strategic contracts. In all, the sourcing process transforms and optimizes existing and future B2B activity.

This report offers a high-level guide to current sourcing trends among North American organizations, identifying the leading features and services offered by today’s advanced sourcing solutions. It also features real-world examples of sourcing process transformations with several case studies of global eSourcing adopters.

Sourcing Today

In order to appreciate the value of eSourcing, it is important to understand why organizations adopt purchasing and supply chain software. In light of increasing globalization and more competitive markets, today’s Chief Procurement Officers (CPOs) face increasing pressure to improve their organizations’ back-office efficiency and reduce processing costs. Many CPOs try to improve supply chain operations to accomplish these goals. In a recent survey by Consero Group, CPOs from a variety of industries reported that vendor management, supplier relationships, and data management are among their top priorities in the next 12 months1, see Figure 1.

Figure 1: CPOs’ Priorities are Based on Improving Supplier and Data Management
“What are your top priorities for the next 12 months? (Select all that apply.)”

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CPOs can address their priorities through more strategically managing current procurement processes, and by implementing Procure-to-Pay and Source-to-Settle automation. Solutions within these spheres that are particularly attractive to CPOs include electronic procurement (eProcurement), contract lifecycle management (CLM), supplier information management (SIM), and eSourcing.

1 Consero Group. “2016 PROCUREMENT & STRATEGIC SOURCING DATA SURVEY.” March, 2016, p. 3-4.
Accessed Augst 11th, 2016.

eSourcing offers several functions that align with the CPOs’ top priorities. This software improves the quality of supplier relationships by offering more supplier information management and validation tools. It supports more competitive and mutually beneficial B2B interactions through dynamic, transparent sourcing engagements, including RFx events and live-bid auctions. It also lowers costs, improves control, and decreases risk by allowing organizations to manage all strategic purchasing on one secure platform.

Another reason organizations find eSourcing software appealing is the benefit of consolidation and standardization. In 2015, PayStream Advisors conducted a survey of over 100 individuals employed in many different industries in order to gauge current trends in sourcing processes. According to PayStream’s research, organizations that adopt eSourcing automation do so for its ability to connect sourcing and procurement, because of the need to improve performance and consistency among suppliers, and for the purpose of reducing costs, see Figure 2.

Figure 2: Most Organizations Have Trouble with Disparate Procurement and Sourcing Processes
“What pains or difficulties led your organization to implement a sourcing solution?”

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Under a manual sourcing process, many organizations struggle to synchronize the efforts of procurement and strategic sourcing. This can lead to redundancies, data errors, and a lack of standardization among contracts, supplier lists, and purchasing process policies. Standardization—or the lack thereof—in supplier contracts can have a significant impact on the integrity of a company’s data security and supply chain efficiency. The Consero Group has found that many CPOs consider third-party contracts to be a very high risk2, see Figure 3.

Figure 3: CPOs Consider Contracts to Be High Risk
What are your top areas of risk? (Select all that apply.)”

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Risks associated with contracts include working with un-validated, high-risk suppliers, losing money from outdated contracts, and using contracts that do not meet regulatory requirements. Sourcing technology enables organizations to standardize and streamline supplier data, purchasing contracts, and spend management policies among many back-office departments, locations, and user roles. It also ensures that suppliers are properly evaluated before a business enters a purchasing engagement with them.

Some industries are better served by an advanced sourcing solution than others. For example, a professional service organization, such as a small marketing company, would not need to conduct many sourcing engagements to fulfill and sustain its business purchasing. A manufacturing company, on the other hand, would derive many benefits from an open sourcing platform that allows it to easily source goods from a wide network of quality global suppliers. Organizations in the retail, healthcare, and higher education industries would also benefit from a sourcing solution, as the software would allow them to centralize purchasing procedures among their typically widespread locations and departments, and would enable them to keep costs low through more competitively priced engagements.

Despite the benefits of sourcing automation, many companies have not adopted eSourcing software. Research shows that the majority of organizations are still operating under a manual sourcing process, see Figure 4.

Figure 4: Most Organizations Have Not Adopted an eSourcing Solution
“Does your organization use any eSourcing / project and RFx creation applications?”

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PayStream attributes this low adoption to a lack of education regarding the features and benefits of eSourcing software. The following section serves to highlight the tools of today’s leading sourcing solutions.

Features and Functionality

The basic workflow of an electronic sourcing lifecycle begins with identifying a need, and recognizing that this need would be best met through a sourcing event. Because sourcing is an advanced procurement function, sourcing event requests can often arise from an approved requisition or a re-evaluated contract. After a sourcing request is approved, the event creation begins.

The following tools are essential functionalities in leading sourcing solutions.

Event Creation

A user begins the sourcing process by creating an RFx and setting up an event. These events can be created from scratch, from a template library, or by incorporating elements from previous events or templates. Depending on the configuration of the system and the organization’s other automation tools, users could potentially also flip requisitions, contracts, and other business documents into an RFx.

As users create their event, multi-stage RFx templates offer functionality for RFI, RFP, and RFQ. Users can set up custom participation guidelines for suppliers, and assign them tasks or request documents. The RFx can include weighted questionnaires designed to score individual suppliers’ responses. This allows an organization to evaluate suppliers on more than just cost; they can collect data and score suppliers in many areas of business eligibility, including experience, tax and regulatory compliance, and quality of goods and services. Buyers can also attach internal documents, such as non-disclosure agreements. In all, the flexibility of template and questionnaire creation tools allows organizations to tailor RFx events to many different spend categories, markets, global regions, and types of suppliers.

As users create an RFx, they can use a collaboration workflow to send the template to colleagues for authoring, editing, and approval. For example, one user may complete the first stage of the template by defining the goods or services needed, while another may configure the scoring controls. The template could also be routed to the legal department for a risk evaluation, ensuring that all details are legally compliant.

Once the RFx is ready, users can search the sourcing system’s supplier lists for candidates, or choose from the solution’s own recommendations. The solution automatically notifies suppliers about the event with a custom email invitation. Often, eSourcing providers offer access to a network of eligible, local, and global suppliers. This allows the user to source goods from a more diverse supplier pool, and to potentially build new, long-term business relationships.

Open Event

Once the sourcing event has begun, users can check its progress at any time, with full visibility into vendor responses, tasks completed, and vendor timeliness. Solutions offer automatic scoring of responses based on questionnaires’ pre-determined scoring weights, attachments, and completed or missing documents.

Event platforms allow for a comparison view of supplier responses to enable organizations to make an informed choice. Once the user has selected a vendor, the suppliers are automatically notified of the next steps. Awarded events can often be converted into single or multiple contracts.

Live Auctions

Sometimes, a sourcing opportunity produces better results through a live auction environment. Users can turn an RFx into a reverse auction to increase supplier competition and receive lower prices, or to adhere to time constraints. These auctions are conducted in highly visible, interactive bidding environments that show bidding activity in real time. Auctions can be designed to run through several different bidding stages, and can also be extended if the buyer desires. Once the auction has finished, the same award processes apply as above.

Vendor Management

A sourcing solution often manages supplier master data through the use of supplier portals and self-service tools. When suppliers choose to participate in an event or want to register with the directory, they must submit certain information and documentation, such as company history, insurance certificates, and/or tax documents.

This data is archived in a database, allowing for advanced searches based on supplier size, location, industry, or revenue. The solution also enables supplier categorization, which is based on general information, addresses, classifications, geographical scope, business type, references and user scores, miscellaneous buyer preferences, and other factors. When a buyer needs additional information from a supplier, they can easily use the contact database to send special requests.

Supplier Portal

eSourcing solutions’ vendor management is made possible by self-service supplier portals. Organizations can onboard suppliers to their sourcing platform through custom email campaigns, or suppliers can register independently through the sourcing portal or the buying company’s website. While the components of a supplier portal vary depending on the solution provider, most systems offer a holistic array of self-service controls around catalog management, profile management, and RFx event and auction participation. Suppliers can log in to their portals to view, accept, and reject contracts and RFx. They can upload documents such as insurance certificates, safety protocols, credit documentation, and environmental certificates. Suppliers can also access a negotiation template that tracks all changes to contracts. After an awarded event is flipped into a contract, some solutions even allow suppliers to manage contracts within the same system.

Post-Event Optimization Tools

Some sourcing solutions include several tools and services for strategically enhancing existing purchasing processes and contracts, sourcing strategies, and supplier relationships.

Supplier performance management tools enable organizations to look into suppliers’ past activities and make more informed decisions based on supplier value. This data can be leveraged to end non-strategic or high-risk supplier relationships. Some supplier performance management tools allow organizations to assemble supplier ratings based on internal notes and reviews from sourcing and procurement users. These review templates can be pre-built or customized based on categories such as commercial risk, safety, quality, environmental, and performance history. In addition, some solutions include benchmarking capabilities that show negotiation rates and performance history based on internal data from other suppliers. The system can take this performance data and reorganize supplier lists by value and category. This data is available for import and export, and is also integrated into the supplier directory.

Another optimization tool is a strategic analytics engine found in some leading sourcing solutions. The engine re-evaluates an organization’s sourcing activities by looking through various fields—including market research, RFx processes, negotiations, contracting, and transaction activities—and identifying savings opportunities. With this tool, organizations can restructure or renegotiate supplier contracts, and can change future company sourcing practices to produce more competitive and higher-quality results.

Leading sourcing solutions may also offer data and risk management through reporting and analytics tools. These tools can include commodity risk management and supplier risk analysis based on credit scores, user reviews, logistics, and delivery history. The resulting data can be compiled in interactive drag-and-drop reporting platforms, offering customizable or standard reporting.

Sourcing Transformation Possibilities

When organizations implement a sourcing solution, they reap the benefits of a secure and efficient purchasing process, premium suppliers, and a healthier supply chain. The following section presents a hypothetical transformation story of a manufacturing organization, Company A.

Company A is a mid-sized retail company with several locations across the world. The company decides to automate their sourcing process by adopting a leading cloud-based eSourcing solution. The following items are some of the features and opportunities Company A gains with the sourcing solution.

  • A platform to connect. Before automation, Company A had inefficient, disorganized methods for sourcing goods and services, often emailing suppliers from master lists and requesting RFx participation, or posting sourcing events on its website. Operating these events through email and the company website was not only time-consuming, it also left gaps in security and afforded little real-time visibility into projects’ statuses. In addition, without a centralized system, there was little process and data synchronization across different departments and locations.
  • With an eSourcing solution, Company A gains a secure, flexible online environment that integrates with existing systems. The solution also automates the majority of the supplier outreach and RFx creation processes, and covers IT maintenance and solution security.
  • Centralization with flexibility. After its process transformation, Company A can bring all spend processes onto one platform without sacrificing the unique purchasing requirements of different company locations and departments. For example, Company A has a diverse array of sourcing needs across its departments and members, and its sourcing events often look very different from one another. The eSourcing platform allows Company A’s users to customize sourcing engagements to their needs. They can build RFx parameters and scoring models that meet their requirements, while still working within Company A’s policies, budgets, and security controls, and while accessing the same supplier lists and company database.
  • The ability to leverage data tools for sourcing decisions. Company A’s advanced eSourcing automation allows it to source goods based on more than just a price point. The solution offers qualitative bid elements in its RFx tools to present a wider view of a supplier’s offerings and viability, achieved through extensive surveys and scorecards, as well as the ability to communicate to suppliers directly from within the solution. This approach enables Company A to find higher-quality suppliers, and offers greater potential to maintain those suppliers for many years.
  • An organized supplier base. Before automation, Company A’s decentralized locations made it difficult to maintain and synchronize supplier data. Many locations were hosting their own version of supplier lists and contracts, often dealing with redundant, out-of-date, or incorrect data. The eSourcing solution provides Company A with an organized supplier information database that greatly improves the quality of supplier lists and supplier management. The solution gives all departments and locations access to the same clean supplier master file, and has helped the company cleanse the lists of faulty data.
  • A broader supplier reach. Not only does Company A’s eSourcing solution enable it to better work with its own suppliers, the company also has access to other suppliers through the solution’s supplier network. This network gives Company A the ability to gain more competitive bids, and to search for suppliers more suited to their needs. This ability is especially beneficial in the case of one-off, high-value sourcing needs that may not be typical to Company A’s industry, as well as in the future if Company A decides to expand its offerings and needs to reach a new market.
  • Supplier information and validation services. Company A’s eSourcing solution offers many supplier information management tools and services. These tools include document management automation for collecting and maintaining supplier requirements, such as tax and government regulatory documents. The provider also offers supplier validation tools through third-party partnerships that enable Company A to validate suppliers and identify high-risk or diverse suppliers. In all, these services enable Company A to fine-tune and strengthen its current supply base, and ensure that future supplier relationships are secure and legally compliant from the start.
  • Optimized supplier contracts. The eSourcing solution’s dynamic process evaluation capabilities give Company A extensive insight into its current operations and contracts, and enable it to improve future processes. For example, the company had a contract with a supplier that had been renewed many times over several years. Over that time period, the original rates became outdated, the contract prices were no longer cost-effective, and the supplier was prone to late delivery of goods. The sourcing solution identified the contract based on the date and cost parameters, and suggested that it be reevaluated. Company A’s sourcing team could then turn this contract into a new RFx event, ultimately ending up with a more competitive price, better contract terms, and a higher-quality supplier.
  • Reporting and analytics. Before adopting an eSourcing solution, Company A had little insight into its procurement and sourcing operations, or into the success of sourcing engagements across departments, regions, supplier groups, and spend categories. Now, the eSourcing solution offers advanced analytics and reporting tools to drill into and evaluate granular spend and process data across all locations and users—and improve those spend management processes.
  • Cost reductions and efficiency gains. Just a few months after implementing the eSourcing solution, Company A has already seen a major transformation of its sourcing operations. It has consolidated many disparate purchasing processes into one streamlined operation with a secure, real-time electronic environment. It cleaned up its supplier list, re-negotiated and re-sourced several large contracts to gain more effective prices and terms, and began relationships with several new, premium suppliers. The company has also seen substantial savings in process costs and Source-to-Settle cycle times, and estimates an additional savings of $1.2 million from reduced costs over the next 18 months.

Conclusion

Sourcing solutions are valuable not only for their ability to improve existing processes, but also for the strategic insight into spend they bring to organizations’ key decision makers. The selection process for finding a sourcing solution requires just as much strategy. As organizations search for an electronic sourcing solution, they should choose one that aligns with their unique business and industry requirements, existing purchasing needs, and future operational goals.

In order to help organizations in their eSourcing search, the following profiles and case studies feature the implementation stories, customer experiences, and offerings of several leading sourcing solution providers.

eBid Systems

eBid Systems is a supplier management, contract management, and sourcing technology provider. The company entered the market in 1999 with the goals of facilitating more streamlined communication between buyers and sellers, and taking the pain out of the RFP process. Today, eBid Systems’ sourcing solution, ProcureWare, combines the company’s technical expertise with decades of experience automating sourcing engagements for mid-market companies. ProcureWare offers a configurable, easy-to-use sourcing platform with tightly integrated supplier and contract management features.

Founded 1999
Headquarters Seattle, Washington
Number of Employees 11
Number of Customers 100 direct (250 indirect through white label partnerships)
Target Verticals Government, Utilities, Education, Service Industries, Facilities Management
Partners / Resellers UAE, Brazil, Singapore, Pennsylvania

Solution Overview

ProcureWare is a cloud-based, affordable SaaS platform hosted at secure Amazon Web Services (AWS) facilities. ProcureWare’s system security is based on ASP.NET architecture. All passwords are encrypted, and access to the ProcureWare site is conducted using HTTPS. Uploaded documents are scanned for viruses, and any infected document is quarantined so that it cannot further propagate the virus.

The ProcureWare solution is written in HTML5, creating a responsive interface that allows users to access the solution across any platform. The system integrates with client financial and accounting systems through batch file transfer and web services.

ProcureWare allows users to create sourcing events from templates, which helps to standardize event requirements, specifications, and bid forms. Documents such as standard contracts and specifications can be stored in a central document library, then attached to new sourcing events. The configurable permissions architecture allows delegation of specific responsibilities for sourcing event creation, administration, and review across an entire organization.

ProcureWare supports a range of RFx types including RFI, RFP, and RFQ. During the RFx process, the solution offers real-time views of supplier responses or sealed bids. An RFx event can require responses in the form of pricing, document attachments, or structured responses to questions (text, currency, percentage, etc.).

ProcureWare allows users to set sourcing events as public (allowing any pre-registered supplier to participate) or private (allowing only invited suppliers to respond). Buyers can communicate with one or many suppliers simultaneously using customizable message templates, and can respond to supplier requests for clarification through the portal.

In ProcureWare, sourcing event administrators can set up customized, weighted scoring criteria and assign an internal team to evaluate and score bid responses. Different evaluators can be assigned to specific scoring criteria within their area of expertise. The sourcing event administrator can review the status of the scoring process and see a compiled ranking of scores upon completion of the process.

ProcureWare supports both reverse and forward auctions, along with the ability to specify a reserve price, minimum bid increment, and auto-extension parameters of the bid event when bids are placed in the final minutes. Auction events can be set up to display the current price or rank of each bidder.

The ProcureWare solution also features a supplier management module and a contract management module. Depending on the client’s preference, the supplier database can be a simple buyer-maintained list of suppliers, or it can integrate with a configurable supplier self-registration portal for onboarding and maintaining current supplier data. The contract management tool allows users to directly convert awarded sourcing events into contracts.

Reporting and Analytics

ProcureWare provides out-of-the-box reports in which data can be filtered, grouped, and sorted as needed. Report configurations can be customized and saved for future use. Many reports include charting features for enhanced display of results, and all reports include the ability for download in Excel or PDF format.

ProcureWare’s reporting features provide users with a comprehensive picture of sourcing effectiveness, providing insight into spending by category, tracking concentration of spend with certain vendors, and indicating pricing trends in various categories. Managers can assess the spend managed by procurement staff and monitor the average times spent to stage and complete sourcing events. For organizations with supplier diversity goals, ProcureWare provides tools that help identify and engage diverse suppliers. The system also tracks bid participation and bids awarded to these suppliers.

Implementation and Pricing

Typical implementations are between 1 and 6 weeks. The implementation process includes initial client discussions to define configuration requirements, configuration of business rules, client acceptance testing, user training, existing vendor outreach, and integrations with client systems where required.

After implementation, customers can access unlimited customer support including telephone support, the web-based ProcureWare support team, and integration with the Zendesk support portal. In the support portal, clients and their suppliers have access to searchable help content, user guides, a knowledge base, and video tutorials addressing the use of the system.

ProcureWare is available in various pricing models to meet the needs of the customer. Typical engagements include a fixed price for implementation and a recurring annual subscription based on the number of “power users” in the buying organization. For clients with a decentralized sourcing process, eBid Systems provides an enterprise subscription that provides unlimited user access for a fixed annual price. For clients that conduct infrequent sourcing events, eBid Systems offers a shared portal available for one-off sourcing events for a fixed price. Through white-label partnerships, eBid Systems also offers the application through a supplier-pay business model, allowing suppliers to participate in sourcing events through a monthly or annual subscription, pay per event participation, or pay only upon award.

Case Study: eBid Systems

Client: Pennsylvania State System for Higher Education

Industry: Higher Education
Headquarters: Harrisburg, PA

“A big plus is the ability for each university in our decentralized system to access a single source of vendors.” – Linda Veneri, Director of Strategic Sourcing

Challenge

The Pennsylvania State System for Higher Education (PASSHE) encompasses 14 state-owned universities, and has undergraduate and graduate enrollment of 120,000 students. PASSHE’s university procurement departments operate independently of one another. The chancellor’s office oversees procurement policy implementation, manages compliance oversight among the locations, and sponsors system-wide sourcing initiatives.
In recent years, PASSHE’s decentralized procurement processes forced each university to manage its own vendors. The universities typically maintained their supplier lists in spreadsheets, or had no vendor list at all. As standalone units, the procurement departments lacked the size and budgets required to individually implement an electronic sourcing solution. Limited to listing sourcing opportunities on their own websites, individual universities were not able to reach a larger vendor community and increase competition.

These decentralized and manual processes caused substantial duplication of effort across departments, and suppliers found it difficult to maintain their accounts with multiple customers across the statewide system. The lack of a consistent procurement process for vendor management and sourcing made it difficult for the central procurement organization in the chancellor’s office to fulfill its role in compliance oversight and monitor sourcing activities as they occurred.

Approach and Implementation

PASSHE’s procurement leadership wanted to gain procurement visibility, transparency, and process efficiency across all campuses with an integrated supplier management and sourcing system. Because the chancellor’s office could not force each campus to adopt its recommended automation system, PASSHE sought a solution that would be easy-to-use and affordable in order to promote wider adoption. This motivation led them to eBid Systems.

Initially, the chancellor’s office rolled out a sourcing solution from eBid Systems and established a framework agreement that would allow each campus to buy into the system using its own funding, and at its own pace. PASSHE’s central procurement organization soon demonstrated results from the implementation, gaining efficiency and process improvements from a shared procurement portal and supplier database.

Results

Today, all PASSHE campuses have elected to join the central procurement portal, which provides them with both a sourcing platform and a supplier network. Campuses no longer have to independently manage vendor lists—instead, they all share access to more than 9,000 highly qualified suppliers in a variety of categories. Although the campuses share the system, the solution’s controls give each procurement department unique administrative access to its own sourcing opportunities. This allows individual campuses to maintain their desired level of privacy and security.

With the solution provided by eBid Systems, PASSHE now has a robust central supplier management and procurement system. The sourcing platform provides an efficient and standardized process framework, facilitates increased supplier competition, and allows for increased transparency of procurement activity system-wide.

SciQuest

SciQuest is a provider of cloud-based business process solutions that enable organizations to streamline their P2P lifecycles. SciQuest’s Spend Management Suite is modular, covering spend analysis, supplier management, sourcing, contracting, eProcurement, and accounts payable automation. SciQuest allows organizations to either leverage the full suite to address their Source-to-Settle challenges, or to select the individual components, functionality, and interfaces that best meet their specific requirements. SciQuest’s goal is to help organizations capture all spend and purchasing processes on one common platform.

Founded 1995
Headquarters Research Triangle Park, NC
Other Locations Pittsburgh, PA; Edmonton, AB; London, England; Hamburg, Germany
Number of Employees 500+
Number of Customers 550+
Target Verticals Commercial (including Manufacturing, Retail, Financial Services, Life Sciences, Utilities, and Chemicals), Higher Education, Healthcare, Public Sector
Partners / Resellers Accenture, McKinsey, Deloitte, PWC
Awards / Recognitions 2014 American Business Award – Silver; 2014 PayStream Advisors P2P Technology of the Year; 2015 Spend Matters 50 Providers to Know; 2015 Inbound Logistics Top 100 IT Provider

Solution Overview

SciQuest’s solutions are deployed in a SaaS environment, and they come with extensive security measures. They can be integrated with any ERP or financial system to adapt to customers’ requirements.

SciQuest combines its sourcing offerings—Sourcing Director and Advanced Sourcing Optimizer (ASO)—to support all of its customers’ eSourcing activities, from the routine to the highly complex. Event creation in Sourcing Director is a permission-based process, and can be delegated to departmental users as well as sourcing teams.

In both Sourcing Director and Advanced Sourcing Optimizer, event creation follows a wizard framework that guides the customer through the necessary steps. Templates and libraries can be used to control the structure of an event by reusing standard content such as questionnaires, items, and pre-requisites. Additionally, Excel import functionality enables event creators to import items, suppliers, and questionnaires to quickly populate events. Both Sourcing Director and ASO have dashboards that give visibility into eSourcing events and their statuses (draft, review, live, awarded, etc.).

Sourcing Director eSourcing events are managed through 3 phases. The first is event approval workflow, which handles the creation of the event and pre-release activities. The second, event responses through award recommendation, allows suppliers using the SciQuest Supplier Portal to view, register, and respond to the eSourcing event. Customers can view these responses and the automatic scoring that has been assigned to each one. The third phase, event evaluation approval, provides formal gating on the award process.

Sourcing Director offers several scoring methods: auto-scoring, cost analysis, best value, and a review process that includes a panel questionnaire. Advanced Sourcing Optimizer uses scenario-based optimization technology to evaluate supplier bid responses against a combination of business constraints and stakeholder preferences.

Advanced Sourcing Optimizer enables sourcing teams to manage certain eSourcing activities more strategically. Data collection and analysis capabilities allow sourcing teams to gain a better understanding of price and non-price factors, as well as additional value that suppliers can bring to the table. Scenario optimization speeds up the time to contract and realization of negotiated savings.

Supplier discovery is enabled via the Supplier Network, where buyers can easily search for new suppliers by name, region, or commodity codes. Suppliers in the network can use the SciQuest Supplier Portal for many sourcing-related activities. In addition to registration and response, the portal allows suppliers to export event content (questionnaires, items/bids, documents) and import their responses via spreadsheets. Additional supplier benefits include the ability to submit alternate items, participate in multi-stage events, and communicate with buyers via the Q&A board. ASO also provides an Expressive Bidding capability that enables suppliers to provide creative responses to eSourcing events, including packages, conditional offers, and alternates.

Reporting and Analytics

Sourcing Director provides a number of reports to improve visibility into eSourcing activity and results, including exports and summary views of event statistics, supplier participation reports, and cost avoidance/savings reports. ASO also provides dozens of pre-built, configurable reports, along with an ad-hoc report builder that allows users to drag and drop data elements to build tables, charts, and graphs. SciQuest Benchmarking is an add-on module for Sourcing Director.

Implementation and Pricing

Typical implementation time is between 16 and 24 weeks. SciQuest delivers standardized training to customers’ internal trainers and “super users” who will train their entire user community, as well as additional on-site training as needed. Customers can view educational materials, participate in online webinars, and enjoy in-person educational opportunities. SciQuest’s Customer Support team is available to customers through telephone, e-mail, and web-based support at any time.

SciQuest also offers the sourcing Best Practices Center (BPC). This resource provides ongoing access to eSourcing best practices consulting, strategic advice, and an expansive content library on topics such as sourcing strategy, event setup, supplier management and communication, and bid analysis.

Sourcing Director and Advanced Sourcing Optimizer are provided as SaaS solutions with multi-year enterprise subscription licenses. Existing SciQuest customers can use Sourcing Director across their businesses with unlimited users with a current subscription to SciQuest. Bundled pricing is offered for customers who purchase additional modules in the SciQuest Source-to-Settle suite.

Case Study: SciQuest

Client: Maersk Group
Industry: Transportation, Oil and Gas/Energy
Headquarters: Copenhagen, Denmark

“Today we have an eSourcing compliance of approximately 90 percent, which would not have been possible without an advanced sourcing tool such as ASO.” – Jacob Gorm Larsen, Global eSourcing Manager, Maersk Group

Challenge

Maersk Group is a global, diversified conglomerate best known for its worldwide shipping (Maersk Line) and ocean port terminal businesses (APM Terminals). It is also involved in the oil discovery and production industries through its oil, drilling, and tanker divisions.

Within the Maersk Group’s strategic back-office teams is Group Procurement (GPRO), a group service function that provides Maersk’s business units with procurement tools and techniques. One of GPRO’s goals is to increase the efficiency of spend management and lower annual costs across the organization.

A few years ago, Group Procurement began to search for an advanced supply chain and purchasing software, hoping to gain control over a larger portion of corporate spend within the organization. This automation initiative would also include sourcing more challenging strategic spend categories such as direct materials, capital expenditures, and indirect spend categories.

Approach and Implementation

GPRO realized that implementing eSourcing within a diversified business like Maersk Group would require a lot of change management and a highly flexible solution. GPRO began looking for a solution that could easily manage a wide range of spend categories and ensure that each business group could create sourcing engagements suited to their unique needs. As GPRO searched the market, it eventually narrowed the focus to cloud-based solutions, as many desktop-based solutions were unable to meet the complexity of the company’s adoption requirements.

In 2011, Maersk Group adopted SciQuest’s Advanced Sourcing Optimizer (ASO). The company chose the ASO for its ability to support buying requirements across the Maersk organization, and to drive competition from the supply base. ASO’s flexibility in bid collection and cost modeling meant the solution could be easily applied to strategic spend categories with high market complexity.

GPRO was particularly impressed with ASO’s Expressive Bidding® technology, as it would allow GPRO to collect more open and detailed proposals from suppliers. For example, Expressive Bidding® incorporates price and non-price bid elements in sourcing events in order to identify any additional value suppliers could bring to the table. GPRO was also attracted to ASO’s optimized scenario analysis capabilities, which enabled spend owners to create sourcing events more in line with their unique preferences and purchasing needs.

Results

Since the introduction of ASO in 2011, GPRO has sourced a large part of its spend and used the application for hundreds of strategic sourcing projects, creating significant savings as well as process efficiencies for the company. In some projects, GPRO reduced sourcing cycle times by up to 40 percent.

In addition to the savings created by ASO, the tool also enables GPRO to make data-driven decisions through the numerous awarding scenarios created in each project. This allows each spend owner to include unique and important details in the decision process, and ensures an optimal result based on the best-value proposition from the supply base.

GPRO’s experience has led it to extend the use of Advanced Sourcing Optimizer into new areas of spend including marketing, security guards, and vessel maintenance programs. The company projects that they will continue to increase usage of ASO in the future.

Xeeva

Xeeva provides cloud-based procurement and financial solutions for indirect spend. The company’s technology addresses the entire indirect procurement value chain from sourcing to procurement to payment. Xeeva provides sourcing automation from creation to award, ensuring collaboration, visibility, and control among appropriate stakeholders at each step in an event. Xeeva’s offerings also include several value-added solutions, including category management, spend analysis, and strategic sourcing. Xeeva Sourcing is offered as part of full-suite deployments or as a standalone solution.

Founded 2007
Headquarters Detroit, MI
Other Locations San Francisco, New Delhi, Amsterdam, Sao Paulo
Number of Employees 350
Number of Customers 30+
Target Verticals Automotive, Industrial, General Manufacturing, CPG, Chemicals, Life Sciences, Energy and Utilities
Partners / Resellers EDS, Xerox, Genioo
Awards / Recognitions American Axle Key Supplier of the Year Award; Ernst & Young Entrepreneur of the Year; Lear Automotive Supplier of the Year; Beechcraft Supplier of the Year

Solution Overview

Xeeva is a cloud-based system that integrates with multiple ERPs and legacy systems through web services, flat files via a secure FTP, or EDI. The system’s user security includes secure login, password templates, and automatic password expiration. The network and solution are SSAE16 compliant and HTTP secure, and all communication is encrypted with SSL endpoint security for external traffic.

Xeeva provides native mobile applications for both iOS and Android platforms, as well as a responsive app for web browsers. The solution supports multiple languages, currencies, and taxation regimes. The solution is also designed to support manufacturing supply chain needs for indirect processes and MRO, and can address regional manufacturing practices such as maquiladora and cross-docking facilities.

Any authorized employee (requestor) may request or recommend a sourcing project or event. Requestors use customizable electronic forms to describe the material or service they wish to source, along with the required-by date, estimated budget, GL and cost-center information, and other details. Requestors can also attach other relevant information and instructions. Once the request is initiated, an assigned buyer will review, clarify, and adjust it as needed. Depending upon a client’s business control configuration, users can send sourcing requests through an additional management approval workflow. Approval hierarchies are configurable according to the company’s existing business structure, and the solution supports approval delegation or out-of-office routing.

After sourcing requests are approved, the buyer prepares the event for release, finalizing details and inviting suppliers to participate. Buyers can choose registered suppliers from the supplier master list, or they can invite “trial suppliers” from Xeeva’s supplier portal, Xeeva Marketplace. From the supplier portal, suppliers participate in sourcing engagements and collaborate with buyers in real time. Suppliers can also use the portal to manage their profile, receive and collaborate on purchase orders, and upload invoices.

Xeeva’s solution allows buyers to end a sourcing event at any time, or upon end of the stated completion time. Upon completion of an event, supplier responses are presented in a side-by-side format, and the solution will highlight key terms of the response for comparison. Xeeva provides automated bid scoring based on quantitative and qualitative elements of a supplier’s response. The criteria and relative weights are configurable based on a client’s procurement policies. The solution highlights the recommended award based on the results of the scoring. Supplier responses and scoring can also be exported for further analysis.

Xeeva’s solution can be configured to require final approval before the bid is awarded and the supplier is notified, in order to ensure compliance with procurement policies. When final awards are approved and awarded to the supplier, the solution can automatically generate and transmit a purchase order.

The Xeeva solution also supports reverse auctions. The solution helps buyers create bid strategies, validate supplier lists, train suppliers on reverse auction requirements, and manage reverse auction events in real time. The solution also offers post-bid analysis and reporting.

Reporting and Analytics

Xeeva provides dashboards (Value Charts) and reporting features for
all sourcing processes. These reports and analytics summarize the current status or lifecycle stage of sourcing opportunities and events, and the solution offers many other reports from spend, operational, and process results perspectives. These tools also summarize key performance metrics and provide drill-down capabilities for more detail (e.g., spend by sub-category or specific supplier). Users can view, track and take action on items of interest from their desktop. Customers can also view audit trail data to support SOX-related compliance.

Xeeva offers configurable reporting capabilities for creating detailed reports, which can be presented online or exported. Xeeva also provides benchmarking insights to help clients identify improvement opportunities and process comparisons based on prevailing category and market trends and pricing data points.

Implementation and Pricing

Xeeva follows a phase-based project implementation methodology. Typical implementation time ranges between 45 and 90 days, and is generally dependent upon aspects of scope such as number of sites, locations, number of users, and state of clients’ existing data.

Solution training can be conducted in person at customers’ sites or remotely via the web. Training also includes on-demand, and train-the-trainer approaches. After implementation, customers have three levels of support choices. Clients also experience a “hyper-care” period after implementation along with a functional support desk, the “Results Desk,” to help drive adoption and maximize system benefits.

Xeeva’s solution pricing consists of an annual subscription fee for the technology and one-time costs for implementation and training. For customers interested in value-added services such as strategic sourcing or category management, these additional services are typically charged on a time and material basis or per transaction.


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