Tigris Attacks Category Management Dilemma

New solution aims to combat erosion of cost savings in strategic sourcing programs; Unilever unit tries it out

New York — May 12, 2003 — Supply chain consultancy Tigris today rolled out a new solution to help companies avoid savings erosion and consistently realize maximum value from their sourcing.

Tigris also reported that a unit of its longtime client Unilever has launched the first three modules of its Transportation Business Center, which is based on the Tigris solution and is designed to help the consumer packaged goods giant improve contract compliance and increase supplier collaboration.

The consultancy said its Category Business Center Technology (CBC Technology) address a key problem facing large corporations: enterprises are realizing only a fraction of potential sourcing savings. In fact, a recent report from technology consultancy Aberdeen Group showed that, among large corporations, only 39 percent of all expected cost savings from strategic sourcing programs are actually realized.

Aberdeen found that in particularly dynamic and complex categories, such as transportation, projected savings can erode rapidly after implementation without the benefit of ongoing category management after sourcing.

Common problems in this area include poor compliance tracking and contract management, with difficulty ensuring that contracted suppliers are used whenever possible, and sub-par performance management, with a lack of clarity in actual supplier activity.

In addition, the lack of efficient means of supplier collaboration can lead to poor communication processes, resulting in failures to identify and capitalize on new savings opportunities, and the fact that ongoing processes are not automated has resulted in slow reaction to new requirements, such as distribution network changes that result in the emergence and/or obsolescence of lanes.

Tigris asserted that CBC Technology addresses each of these issues with a single, modular solution. The solution enables the integration of existing systems to provide a data foundation through which decision-support information is gathered and made available. It also automates the contract management process, connecting strategic, transactional and communication systems in a centralized location.

As a result, Tigris said, corporations can accelerate their category management workflow, improve reaction time and ensure consistent access to actionable information. The ultimate goal of the solution, according to the consultancy, is to help companies reduce costs by locking in savings through improved compliance and by rapidly addressing unexpected changes in the supply base.

"Companies need to ask themselves, 'Where's the benefit of a sophisticated strategic sourcing effort if we're not managing our negotiated contracts in the same kind of systematic, data-intensive manner?'" said Brent Habig, CEO of Tigris Consulting. "The extremely high rate of leakage can severely undermine a strategic sourcing effort and cost companies millions. Tigris developed its CBC Technology to apply the same degree of rigor and focus to category management that has long been integral to strategic sourcing. As a result, companies can fully realize the savings they've identified and reported to management and investors."

Unilever Develops Transportation Center

Unilever Home & Personal Care North America is using CBC to develop its Transportation Business Center (TBC), designed to put all the information that the company and its carriers need to know about Unilever's transportation business at the fingertips of the company's personnel.

"Instead of chasing data, we can focus on making smarter, better-informed decisions so that our carriers can meet our customers' needs, correctly, the first time and every time," said Chuck Irwin, director of transportation for the Unilever division.

Irwin said that once all the three planned modules are implemented in a central, Web-based application, Unilever should be able to drive to operational excellence by ensuring contract compliance, reacting faster to changes in its network, identifying areas of unacceptable performance and uncovering improvement opportunities.

"Already, we've developed better, more collaborative communication with our carrier base than ever before through the distribution requirements and contract management modules," Irwin said. "Ultimately, our Transportation Business Center will enable better customer service, as we now have better, more timely information about our customers' delivery and warehousing needs and can be more responsive."