Digital Union, the real-time supply management specialist, today announced the availability of its Supply Curve solutions. Supply Curve takes the toughest and most complex sourcing demands and creates a real-time, online platform to allow buyers to source goods and services from multiple suppliers, as well as determining the optimal combination of winning bids based on a sourcing strategy rather than simply focusing on price.
By inviting suppliers to create their 'best bid' based on a combination of non-price factors and their own volume discount structures, and by allowing the buyer to allocate parts of the order to as many suppliers as appropriate, Supply Curve solutions create an environment for fairer trading by taking into account factors such as location, quality, reliability and reputation. This allows smaller, local vendors, to compete on equal terms with major global players without being driven out the market from the outset because they cannot compete on price.
"In the real world, sourcing decisions are often made by bringing multiple suppliers and complex considerations into the equation," said Paddy Lawton, CEO of Digital Union. "While this approach usually results in the best sourcing decision, it is typically a phenomenally complex and time-consuming process that can only be applied to a small part of a company's spend. Traditional online auction software has not been able to manage this complexity so contracts have been awarded to just one supplier, resulting in reduced value for both buyer and supplier."
Supply Curve solutions work by creating an interactive multi-round negotiation environment that calculates and continually reassesses the optimum purchasing strategy in real-time. Buyers set their optimal sourcing criteria up front, inviting suppliers to incrementally adjust their bids based on a real-time view of how much of the total award has been allocated to them. This is determined based on price, volumes and discounts as well as all the non-financial factors associated with the negotiation. Suppliers can win as much of the order as they are able, without crippling their businesses by purely bidding on cost. Other solutions rely on single round bidding followed by off-line analysis of the bidding round, resulting in significantly slower auctions and less optimal results.
"Sourcing is an extremely complicated business that involves a great deal of risk for both buyers and suppliers. e-Sourcing initiatives have long offered the opportunity to reduce time but may not have taken all factors into consideration, such as quality and reliability, that are equally as important as price," said Stuart Blackery, B2B Director, Tesco
"Digital Union ezMarket solutions offer the best of both worlds to benefit buyers and suppliers. Its sourcing and procurement products enable buyers to set parameters up front, streamline the sourcing process and award business to a single or multiple suppliers. An added bonus for all parties is that it encourages fair trade by providing opportunities for suppliers who can offer better quality or reliability to compete on an equal footing with those who can offer lower prices," he added.
Supply Curve solutions allow companies to realise the following benefits for the first time:
* Allocate the optimum volumes across multiple suppliers
* Create a platform for suppliers to bid on both divisible and indivisible bundles
* Specify both the minimum and maximum number of suppliers who can win
* Limit how much of the contract a single supplier can win
* Enable suppliers to offer the volume discount breaks that work for them
* Drive down the cost of the purchase while still providing benefits and adequate margins for suppliers.