Spend Analytics for Direct Materials — Akoya
Purchased direct materials represent more than 35 percent of sales for large manufacturers, according to figures from the Center for Strategic Supply Research (formerly the Center for Advanced Purchasing Studies, or CAPS). The largest U.S. manufacturing companies taken together spend over $400 billion on direct materials annually. Sourcing and procurement executives at these companies are under continuous pressure to reduce their direct materials spend, and yet these executives have had few tools at their disposal to help them do deep analyses of their companies' spend on directs.
Now a company called Akoya is looking to arm supply managers with the information they need to drive additional savings in their direct materials spend. Founded in 2003 as a spin-off from internal software developed at Caterpillar Inc., Peoria, Ill.-based Akoya offers a business intelligence solution that uses newly developed data-mining algorithms to analyze part features, construct "should cost" curves across individual families of parts, and determine the key drivers that affect the cost of the parts. Caterpillar has been running pilot projects using the Akoya tool and is said to have already identified millions of dollars in cost savings opportunities.
Supply Chain Finance — Orbian
Fortune 500 tool manufacturer Stanley Works had been periodically extending payment terms with its suppliers in an effort to match its payment terms with its own receivables and to reduce the need for working capital. However, this had the impact of pushing the cost of funding working capital down the supply chain, typically at a cost that was greater for the supplier than for Stanley.
To help alleviate the impact of increased working capital cost on its supply chain, Stanley adopted an electronic payment solution from Orbian and began offering a new electronic payment type in its accounts payable system. Once an invoice is approved, a payment instruction is sent to the Orbian system, which provides Stanley's suppliers with visibility of the approved payment instructions and full electronic settlement of the payment amount on the net due date. Orbian also offers the supplier a range of receivables finance options, allowing them to determine how much of their receivables they wish to discount and how often they wish the discount to occur.
Business Services e-Procurement — Rearden Commerce
U.S. corporations spend approximately $1.5 trillion annually on employee services, with nearly 50 percent of these expenditures occurring outside of contracted rates with preferred vendors, according to industry and government estimates. Rearden Commerce (formerly known as Talaris) aims to address this challenge by offering a horizontal "Services On-Demand" platform, providing employees with a single, standardized interface intended to make it easier for them to find and purchase a variety of common business services, while allowing companies to control their employees' choice of the providers of those services. The company's initial application, Rearden Employee Business Services (EBS), is designed to optimize the scheduling, purchasing and management of such travel services as flights, hotels, ground transportation and car rental, and such meals and entertainment line items as dining, event tickets, corporate gifts, and golf and other business development activities.
The potential return on investment in the solution, available on an on-demand, subscription basis, comes both in terms of hard dollar savings through better enforcement of policies and reduction in off-contract spending, and in soft dollars savings accrued through the efficiencies that a unified platform offers, according to Rearden. Companies that have signed up to use Rearden's service include Genesys Telecommunications Laboratories, Motorola and Whirlpool.