FreeMarkets Targets Supply Management

Reverse auction pioneer expands beyond e-sourcing to offer solution for supply chain collaboration, process flow

Pittsburgh  January 6, 2003  e-Sourcing pioneer FreeMarkets today launched an effort to expand beyond its reverse auction roots into the supply management field with the release of a suite of applications targeting supply chain collaboration, knowledge management and process flow.

In addition, FreeMarkets announced that long-time customer United Technologies Corp. was expanding its use of the provider's offering to include the ES solution.

FreeMarkets said that ES, which includes various software modules built on a core platform, is intended to let companies perform key supply management activities. The solution includes modules for requirements management, supply relationship management, sourcing process and decision management and contract management.

"Excellence in global supply management is vital to the overall competitiveness of a company," said Chris Gormley, vice president of product management at FreeMarkets. "But to achieve excellence, companies must connect the people, processes and knowledge involved in sourcing and supply management via technology that can support their efforts. FreeMarkets ES facilitates these connections."

The requirements management module is intended to drive more effective sourcing outcomes by helping companies increase communications with engineering departments and other users of goods, services and capital equipment, allowing sourcing professionals to get a clearer understanding of requirements and to collect higher quality data faster and more efficiently through enhanced collaboration and the reuse of information.

This module includes a repository for centralized requirements for goods, services and capital equipment specifications and statements of work, as well as requirements templates to capture and share attributes that suppliers need to accurately provide goods, services or capital equipment.

Other features include drawing vaults to store and manage engineering documents using version control and check-in/check-out features, approved supplier cross-reference to link requirements to approved supplier records, complex bill of materials and assemblies to manage multi-level requirements, and consistent classification schema to categorize requirements and drawings on either a standard or custom basis.

The supplier relationship management module is intended to give companies global visibility into their supply base and to help them effectively manage their supplier relationships. The module includes a central supplier library to archive such supplier information as capabilities, contacts and parent/child company relationships, a supplier portal view to establish a single point of entry and organizational contact for suppliers, and supplier self-registration to allow suppliers to nominate themselves for specific or ongoing business opportunities.

Other features include capability profile templates to standardize supplier comparisons, supplier capability library to house profiles that can be updated by suppliers and queried across an organization, scorecarding and analysis to facilitate global cost, quality and performance assessments, and supplier activity tracking to monitor participation in projects and results generated.

FreeMarkets said the sourcing management module would let companies standardize their sourcing processes and facilitate cross-functional collaboration, allowing them to reduce the time it takes to negotiate for goods and services. Specific functionality in this module includes process management to map best practices into project workflow; project management to facilitate cross-functional, team-based management and tracking of sourcing process activity; and request-for-quote, -proposal and -information (RFx) management to create, copy, edit and re-use RFQs, RFPs and RFIs. Additional features include online bidding and cost breakdowns to define and collect supplier cost parameters.

A decision management module is intended to help companies make optimal decisions based on total cost of ownership by evaluating alternative award scenarios and standardizing evaluation criteria to ensure compliance with their overall supply management strategies. Features in this module include advanced weighting and scoring using custom-defined weights and scores, scenario and what-if analysis to facilitate decisions based on multiple scenarios, and cost breakdown analysis to enable roll-up and evaluation of cost structures provided through multiple supplier proposals.

The contract management module provides a central contract library to create a category-driven repository with information on pricing, terms and conditions, expiration date and organizational contacts. A contract vault is intended to facilitate the storage and management of contract documents using version control and check-in/check-out features. The solution also includes alerts to notify an organization when contracts are set to expire, as well as search capabilities to enable queries based on item, category, expiration date, keyword, owner and other criteria.

Additional functionality to be embedded in future releases of ES will include current FreeMarkets offerings Spend Visibility and Savings Implementation, according to the solution provider.

Commenting on the FreeMarkets solution's release, Tim Minahan, vice president and managing director for supply chain research at technology consultancy Aberdeen Group, noted that global supply management is a complex initiative that requires the proper alignment and management of multiple stakeholders, processes and information flows.

"Executing such initiatives effectively requires infrastructure that can integrate these elements and drive supply management activities across a global network of supply partners," Minahan said. "By expanding its solution set to include software designed to facilitate such extended connections, knowledge management and process flows, FreeMarkets is gearing up to enable the next generation of supply management."

In addition to launching ES, FreeMarkets also announced that United Technologies, a long-time user of the provider's e-sourcing services, has signed up to use the new supply management solution.

"Since 1996, FreeMarkets has been an integral part of UTC's supply management initiatives, providing software, knowledge and services that we have used successfully to improve our sourcing," said Kent Brittan, vice president of supply management at UTC. "We are very pleased to be taking our relationship with FreeMarkets and our supply management organization to the next level by adding FreeMarkets ES to our portfolio of technology solutions."

Brittan noted that, using the FreeMarkets toolset, UTS has placed more than $2 billion in annual contracts into the marketplace through the execution of over 3,000 online negotiations, identifying savings in the range of 20 percent.

To learn more about United Technologies' pioneering experience in adopting e-sourcing technology and processes, read "'e' Marks the Spot" in the November 2000 issue of iSource Business.