TechWeb

Sources Of Purchasing Expertise

Mar 30, 2003 (07:03 PM EST)

Read the Original Article at http://www.informationweek.com/news/showArticle.jhtml?articleID=8700061


Improving the business processes that support strategic sourcing continues to be a hot-button topic for many companies. Often missing in businesses' sourcing arrangements are the added knowledge and expertise that will let companies get the most value out of their technology deployments.

Last week, Tradec Inc. disclosed partnerships with a handful of knowledge providers to add content and intelligence to its direct-materials sourcing software for manufacturers via new services. Web-services technology lets the content providers deliver the data to Tradec's Cost Management System in real time. Also last week, Emptoris Inc. revealed a partnership with Cap Gemini Ernst & Young U.S. that integrates best practices the consulting firm has developed into Emptoris' sourcing software.

Sourcing software can help companies improve the business processes that define how and with whom they spend money for goods and services, which can equal 40% to three-quarters of companies' overall operating expenses, says Ken Gottesman, VP of sourcing and E-procurement at Cap Gemini Ernst & Young.

Cutting sourcing costs for strategic materials used in product manufacturing can help businesses improve their financial footing, says Edwin Winder, Tradec's chairman, president, and CEO. "Direct-material costs are the largest opportunity for making a difference" to the bottom line, he says.

Tradec's new offering, dubbed Tradec Network Services, lets customers leverage services from ComStock, a division of Interactive Data Corp., so procurement managers working with suppliers around the globe can normalize quotes data for various currencies to do intelligent analysis. Services from PCNalert are designed to help procurement managers early in the design phase switch out parts that, for example, will soon be discontinued, before sourcing those parts becomes a problem.

Direct ApproachSiliconExpert Technologies Inc.'s information can help companies source parts functionally equivalent to those requested by engineers but not on a company's approved list, and iSuppli Corp. provides market-trends data that commodity-procurement managers can use to measure how well they're doing at getting the best prices, as well as measure the performance of outsourced manufacturing partners and suppliers on pricing issues.

Andy Gomez, senior manager of procurement operations at a leading electronics manufacturing services company, says sourcing software designed to help manage direct-materials spending can help his company provide more-competitive pricing and value-added services to its customers. The company is using Tradec Network Services to collect and analyze cost information on all business proposals and material costs updates. The Tradec system is helping reduce the manual workload, data-entry errors, and quote-processing cycle times associated with sourcing, Gomez says.

Subscription prices for Tradec Network Services range from about $1,000 monthly for currency data to $10,000 monthly for more specialized information.

Emptoris and Cap Gemini Ernst & Young have implemented about 30 best-practices packs into the Emptoris Sourcing Portfolio, a Web-based suite of sourcing software. The practices stem from the relationship Cap Gemini Ernst & Young has had with Emptoris for several years, as well as with clients the firm has worked with to help them improve sourcing. "We like to leave behind processes, organizational changes, and a technology infrastructure so that there is real sustainable change" to the environment, Gottesman says.

The best practices include content, such as a template for request for proposals and key questions companies should ask of their suppliers. The practices, embedded in the software, also include general guidelines for the overall sourcing process.