Executive Briefings

Verticalnet extends the reach of sourcing solutions

As manufacturers and retailers outsource more and more of their business processes, they will need sourcing solutions that provide real-time information to all parties.

Verticalnet re-launched itself as a private exchange and sourcing solutions company at the beginning of this year when it acquired Atlas Commerce and began shedding its many industry-specific e-marketplaces. But Vertical-net is also leveraging its expertise with exchanges and "virtual business" models to offer up a very different type of sourcing solution from those offered up by scores of enterprise resource planning (ERP) vendors and point solutions companies.

Verticalnet's suite of solutions, called the Collaborative Supply Chain, is designed specifically to support business processes shared across the supply chain where there is a critical need for collaboration at multiple tiers in the supply chain.

"Global manufacturers and retailers need to see and connect with multiple tiers of trading partners to efficiently manage the sourcing and procurement processes which make up the collaborative supply chain," says Dan Tiernan, Verticalnet's senior vice president and chief technology officer. "Customers want seamless integration of trading partners into a common platform and seamless integration of data across applications."

All Verticalnet applications in the suite are powered by a private exchange foundation called eXtended enterprise management (XEM) that enables collaboration across the supply chain. This foundation operates in a non-intrusive layer above a company's existing ERP and enterprise systems. Verticalnet's Collaborative Supply Chain solutions provide visibility into critical business information for the network of businesses that make up the extended enterprise. They enable automated multi-enterprise business processes to reduce the costs of supply-chain functions such as sourcing, planning and order management.

Verticalnet's collaboration suite is made up of three groups of solutions:
1. Strategic Sourcing, which includes Spend Management and Sourcing Events
2. Collaborative Planning
3. Order Management

Strategic Sourcing
In the Strategic Sourcing solution, the Spend Management application allows the user to see where and how spending occurs across the entire enterprise, so it can understand the relative importance of price, quality, vendor service, inventory, and delivery timing in procuring direct materials. Spend Management works across divisions to identify high priority opportunities, links it to sourcing events and finally monitors performance of suppliers and internal departments against contracts to ensure that negotiated savings are achieved.

The Sourcing Events application includes multiple tools for managing and executing the sourcing process including:

• Request for information (RFI), request for quotation (RFQ), request for proposal (RFP) engine that permits companies to automatically generate and distribute the right type of RFx. The application accommodates integration between the buyer, the buyer's business partners and the suppliers, allowing an enterprise to consolidate both internal and business partner forecasts into an RFQ.

• Auctions of all types are supported, including reverse auctions, English auctions, first-price sealed bids and Dutch auctions.

• Structured negotiations between a seller and multiple buyers. This functionality makes real-time, online negotiations possible on issues, including price, quantity, payment and freight terms. All negotiation information is stored in a common repository. When counter-offers are made, the software compares previous offers and highlights changed attributes. The Sourcing Events application also automatically converts all contract information to previously agreed upon contract details, such as percentage discounts, promotion prices and commission charges.

• Bid analysis capabilities allow users to score and award the business to the supplier(s) that best meets requirements.

• Award contracts automatically. Contracts negotiated through Sourcing Events can be entered and managed in Verticalnet Spend Management.

Because Verticalnet's XEM foundation operates across the entire supply chain, a company has the ability to manage suppliers in a sourcing community, allowing for any qualified supplier to participate in any sourcing event. This increases the speed with which sourcing events are completed, and leads to greater event participation.

Collaborative Planning
Verticalnet's Collaborative Planning application is not an optimization or scheduling tool in the traditional sense. Its role is to work with existing advanced planning and scheduling (APS), supply-chain management (SCM) and other planning applications by sharing the results across the supply chain. It is a visibility tool.

For example, SCM applications are focused on calculating optimized plans, but often there is no way to collect and maintain data from external partners. The Verticalnet solution enables the collection of demand information to be used to calculate the plan, and then shares the calculated plans with external trading partners for their ongoing updates. In the case of product lifecycle management (PLM), the application maintains engineering and bill of material specifications for a product. Collaborative Planning communicates with trading partners using the PLM data to tell them how much of the product should be made, where it should be delivered, etc.

While many legacy-planning applications may have their own collaborative capability, Verticalnet's solution provides a single point of interface for collaborating on all data from all systems. It uses a common spreadsheet metaphor that users can fill in on the screen and download for their own internal purposes. Not only is integration greatly simplified, but all firms in the supply chain can break out of the hierarchical planning pathway that doesn't work well in an extended enterprise model. Verticalnet Collaborative Planning is designed for those organizations that recognize the need to shift their focus from internal planning and demand forecasting to collaborative planning and improved response to actual changes in customer demand.

Order Management
Verticalnet's Order Management application automatically routes orders, documents and other time-critical information to the appropriate members of the extended supply chain in real time, which can save days or weeks over the traditional paper-based processes. Orders that impact multiple suppliers are automatically segmented, with each supplier only receiving the information relating to their products or services. Cross-enterprise workflow allows all parties to approve or reject changes online, avoiding standard change-order process delays.

This function is especially valuable to companies that outsource manufacturing. Contract manufacturers gain immediate insight into orders, full visibility into outbound logistics, and the ability to execute on multi-party financial settlement processes that go along with this business model.

This extended order management capability also allows suppliers at any tier to leverage the buying power of the dominant player in the supply chain. Normally, if product manufacturing is outsourced to multiple suppliers, each supplier contracts individually with component suppliers and may have less purchasing clout. Verticalnet's solution allows aggregation of spending by all trading partners - including contract manufacturers and suppliers - as the basis for contracts with preferred suppliers based on the new volume.

Verticalnet's Order Management solution also can play an important sales and customer service role because complete fulfillment and delivery information is pulled into the application from all customer-facing applications, either internal or external.

In summary, Verticalnet Order Management provides visibility into the multi-enterprise process of moving orders, materials and financial settlements. Increased visibility throughout the supply chain allows all parties to reduce cost, inventory and cycle time.

For more information, go to www.verticalnet.com.

Verticalnet re-launched itself as a private exchange and sourcing solutions company at the beginning of this year when it acquired Atlas Commerce and began shedding its many industry-specific e-marketplaces. But Vertical-net is also leveraging its expertise with exchanges and "virtual business" models to offer up a very different type of sourcing solution from those offered up by scores of enterprise resource planning (ERP) vendors and point solutions companies.

Verticalnet's suite of solutions, called the Collaborative Supply Chain, is designed specifically to support business processes shared across the supply chain where there is a critical need for collaboration at multiple tiers in the supply chain.

"Global manufacturers and retailers need to see and connect with multiple tiers of trading partners to efficiently manage the sourcing and procurement processes which make up the collaborative supply chain," says Dan Tiernan, Verticalnet's senior vice president and chief technology officer. "Customers want seamless integration of trading partners into a common platform and seamless integration of data across applications."

All Verticalnet applications in the suite are powered by a private exchange foundation called eXtended enterprise management (XEM) that enables collaboration across the supply chain. This foundation operates in a non-intrusive layer above a company's existing ERP and enterprise systems. Verticalnet's Collaborative Supply Chain solutions provide visibility into critical business information for the network of businesses that make up the extended enterprise. They enable automated multi-enterprise business processes to reduce the costs of supply-chain functions such as sourcing, planning and order management.

Verticalnet's collaboration suite is made up of three groups of solutions:
1. Strategic Sourcing, which includes Spend Management and Sourcing Events
2. Collaborative Planning
3. Order Management

Strategic Sourcing
In the Strategic Sourcing solution, the Spend Management application allows the user to see where and how spending occurs across the entire enterprise, so it can understand the relative importance of price, quality, vendor service, inventory, and delivery timing in procuring direct materials. Spend Management works across divisions to identify high priority opportunities, links it to sourcing events and finally monitors performance of suppliers and internal departments against contracts to ensure that negotiated savings are achieved.

The Sourcing Events application includes multiple tools for managing and executing the sourcing process including:

• Request for information (RFI), request for quotation (RFQ), request for proposal (RFP) engine that permits companies to automatically generate and distribute the right type of RFx. The application accommodates integration between the buyer, the buyer's business partners and the suppliers, allowing an enterprise to consolidate both internal and business partner forecasts into an RFQ.

• Auctions of all types are supported, including reverse auctions, English auctions, first-price sealed bids and Dutch auctions.

• Structured negotiations between a seller and multiple buyers. This functionality makes real-time, online negotiations possible on issues, including price, quantity, payment and freight terms. All negotiation information is stored in a common repository. When counter-offers are made, the software compares previous offers and highlights changed attributes. The Sourcing Events application also automatically converts all contract information to previously agreed upon contract details, such as percentage discounts, promotion prices and commission charges.

• Bid analysis capabilities allow users to score and award the business to the supplier(s) that best meets requirements.

• Award contracts automatically. Contracts negotiated through Sourcing Events can be entered and managed in Verticalnet Spend Management.

Because Verticalnet's XEM foundation operates across the entire supply chain, a company has the ability to manage suppliers in a sourcing community, allowing for any qualified supplier to participate in any sourcing event. This increases the speed with which sourcing events are completed, and leads to greater event participation.

Collaborative Planning
Verticalnet's Collaborative Planning application is not an optimization or scheduling tool in the traditional sense. Its role is to work with existing advanced planning and scheduling (APS), supply-chain management (SCM) and other planning applications by sharing the results across the supply chain. It is a visibility tool.

For example, SCM applications are focused on calculating optimized plans, but often there is no way to collect and maintain data from external partners. The Verticalnet solution enables the collection of demand information to be used to calculate the plan, and then shares the calculated plans with external trading partners for their ongoing updates. In the case of product lifecycle management (PLM), the application maintains engineering and bill of material specifications for a product. Collaborative Planning communicates with trading partners using the PLM data to tell them how much of the product should be made, where it should be delivered, etc.

While many legacy-planning applications may have their own collaborative capability, Verticalnet's solution provides a single point of interface for collaborating on all data from all systems. It uses a common spreadsheet metaphor that users can fill in on the screen and download for their own internal purposes. Not only is integration greatly simplified, but all firms in the supply chain can break out of the hierarchical planning pathway that doesn't work well in an extended enterprise model. Verticalnet Collaborative Planning is designed for those organizations that recognize the need to shift their focus from internal planning and demand forecasting to collaborative planning and improved response to actual changes in customer demand.

Order Management
Verticalnet's Order Management application automatically routes orders, documents and other time-critical information to the appropriate members of the extended supply chain in real time, which can save days or weeks over the traditional paper-based processes. Orders that impact multiple suppliers are automatically segmented, with each supplier only receiving the information relating to their products or services. Cross-enterprise workflow allows all parties to approve or reject changes online, avoiding standard change-order process delays.

This function is especially valuable to companies that outsource manufacturing. Contract manufacturers gain immediate insight into orders, full visibility into outbound logistics, and the ability to execute on multi-party financial settlement processes that go along with this business model.

This extended order management capability also allows suppliers at any tier to leverage the buying power of the dominant player in the supply chain. Normally, if product manufacturing is outsourced to multiple suppliers, each supplier contracts individually with component suppliers and may have less purchasing clout. Verticalnet's solution allows aggregation of spending by all trading partners - including contract manufacturers and suppliers - as the basis for contracts with preferred suppliers based on the new volume.

Verticalnet's Order Management solution also can play an important sales and customer service role because complete fulfillment and delivery information is pulled into the application from all customer-facing applications, either internal or external.

In summary, Verticalnet Order Management provides visibility into the multi-enterprise process of moving orders, materials and financial settlements. Increased visibility throughout the supply chain allows all parties to reduce cost, inventory and cycle time.

For more information, go to www.verticalnet.com.