2. Focused on Innovating and Improving the
Buying Process Worldwide
• Through a unique combination of
– Market information
– Industry expertise
– E-commerce solutions
– Active network of trading partners
• With two primary business lines:
– Collaboration Hubs
– Negotiation Solutions
• Backed by strong global presence:
– Privately held, founded in 1995
– Employees in US, Europe
– Serving over 100 companies worldwide, in chemicals,
cable & wire, and other manufacturing industries
3. Supply Chain Solutions Overview
• Collaboration Hubs
– Hosted transaction processing and supporting
supply chain applications:
• Order management
• Inventory visibility
• VMI
• eNegotiation Solutions
– Managed Events
– Professional services
– Trading Center
4. eProcurment Scope of Services
“Sweet” Spot
Consider
Supply
Factors
Identify /
Qualify
Suppliers
Determine
Sourcing
Strategy
Execute,
Assess and
Award
Determine
Supply
Needs
Monitor
Supplier
Performance
• Gather bids and
terms
• Clarify responses
• Optimize and
determine
awards
• Negotiate
contracts with
suppliers
• Match negotiating
technique with
environment:
–Dynamic
bidding events
–RFQ’s / RFI’s
–Distributor
events
• Identify historical
suppliers
• Assess
performance
history
• Assess 3rd party
supplier
databases (other
alternatives)
• Qualify new
suppliers as
necessary
• Volume of
material
• Total spend
• Concentration of
suppliers
• Delivery
restrictions
• Monitor
manufacturing
operations
• Consider
production
forecasts
• Monitor supplier
availability
• Gather
performance
data
• Assess
performance
vs. metrics
• Rate and rank
suppliers
Handle
Logistics/
Payment
• Schedule
deliveries
• Coordinate all
inbound logistics
• Approve delivery
quantities and
qualities
• Process all
purchase-to-pay
documents
• Release
payment
Supply Chain Connect can provide all the procurement services for a
given category of products. Typically we support procurement
personnel by leveraging eNegotiation tools effectively. We bring a
unique mix of product knowledge, market intelligence and online
auction event design experience to provide our clients with a
“market edge”.
5. We Support a Variety of eNegotiation Tools, and Know When
to Use Which One
Online eBid – What and When?
• Any product, service that is paper biddable with value of more
than $100,000
• Item to be auctioned must be clearly and completely described
• Buyer has the ability to choose between bidders
• Switching cost is substantially below expected benefits
• Minimum of two interested bidders
• Use in any market condition when you must negotiate
• Event-based transaction model for either simple or very complex
electronic reverse (buy) auctions
• Subscription model for sourcing/negotiation tools: eRFx and
self-service auctions
• Supplier-funded model for data sharing and collaboration tools
6. We offer full range of on-line bids and
supporting services
eNegotiation Tools
• Self-service auction platform – web-based application which
supports RFQs and dynamic auctions in a number of pre-defined
formats. Also accessible to existing supplier database.
• Full-service auction platform – web-based application, fully
customizeable to support any type of bid format, used by Supply
Chain Connect staff.
Subscription/Pricing Models
• Time and materials, based on level of effort
• Results-based
• Hybrid
• Single event, or longer-term subscriptions
7. We have successfully used eNegotiations for
many categories of raw materials and indirect
materials and services
Raw Materials:
• Hundreds of electronic bids annually
• Products include acids, bases, solvents, intermediates, pigments,
anti-oxidants, stabilizers, process aids, functional additives, specialty
organics, resins, fillers and inorganics
• Principal producers and distributors participate
• Prices bid- fixed, indexed, and algorithms
Indirect Materials and Services:
Packaging
• Drums, Pails, Semi-bulk
containers
• Metal, Plastic, Fiber
• Corrugated Packaging
• Pallets, Wrap
Services
• Security
• Temp Labor
• Janitorial
• Printing
• Hotel Rooms
• Auto Leases
Energy
• Electricity
• Natural Gas
• Coal
Industrial Equipment
• Reactors
• Injection Molders
• Autoclaves
• Tanks
Safety Supplies
• Shoes
• Glasses
• Gloves
• Etc
Project Management
• Construction
• Demolition
8. Representative Engagement: Bulk
Solvents Buy
Step / Week 1 2 3 4 5 6 7 8
Analyze spend / determine
purchasing strategy
Refine and distribute event
statement
Gather qualifying bids
Determine handicapping
Run dynamic event
Analyze results and award
Situation: Client was buying ~$6 million of bulk solvents and ethanols from combination
of distributors and manufacturers. Given recent price increases, client wanted to see if
we could analyze spend and improve their negotiating position.
Solution: We analyzed spend and identified ability to aggregate spend across multiple
different products. We also identified where manufacturers could effectively compete
with distributors. We conducted 2 online bidding events, one for 19 mmlbs of 6 different
solvents, and one for 6.5 mmlbs of ethanols (3 different industrial grades). Both events
were for a 2-year supply, with quarterly price protection.
Results: Contacted 20 suppliers,
15 agreed to participated. Active
bidding on all lots, lowest
bidders for each product was the
incumbent, but yielded $620,000
in savings (10%).
9. On-line bids produce results
Cost Reduction/Avoidance typically 5-15% depending on product or
service
Market dynamics determine final price
Level playing field for all suppliers- Incumbent supremacy is
challenged by the market
Non-price soft factors are assessed quantitatively
10. Indirect materials example (MRO items)
Buyer requested quotes on approximately $1.2 million of MRO
goods.
128 items to be consumed over 18 months as part of a construction
contract
Initial bids received from 6 distributors, only 2 were able to meet all
requirements
During dynamic bid, both
suppliers lowered their initial
bids by 25%
Resulting savings were over
$250,000
11. Associated Services – with or without an
“Event”
• Outsourced negotiations, transaction facilitation and
execution
• Spend analysis
• Price benchmarking
• New supplier identification
• Tool evaluation [3rd party tools]
• Opportunity analysis and recommendation
• Fulfillment & award optimization analysis
• Supplier training & coaching
12. Representative Customer Activity: Buy
Auctions for a Specialty Chemical
Producer – 2007
Item Type Auction Spend Savings
Hotels Indirect Basic $176k $88k
Janitorial Indirect Basic $2.1MM 33%
Steel drums Indirect Full $2.6MM 3.5%
Car leasing Indirect Basic $2.4MM Strong savings
IBC containers Indirect Basic 857K EU Fractional savings
Steel pails Indirect Self $150k 5%
Polyester polyols Direct Self >$1MM NA
Titanium dioxide Direct Basic $6.7MM 9%
Organic pigments Direct Full $3.1MM 33%
Antioxidants Direct Basic $2.4MM 3%
Flow modifiers Direct Self $100k NA
Distributor chemicals Direct Full 18MM 14%
