1) P&G implemented a new sourcing approach called "Expressive Competition" using CombineNet's optimization software to allow for more flexible and collaborative bidding between suppliers and buyers. 2) This led to significant cost savings upwards of $100 million across multiple sourcing events while improving supplier relationships and satisfaction. 3) The new approach allowed suppliers to bid on packages of items, offer discounts, and express alternative options in a way that more accurately captured their costs and capabilities compared to traditional reverse auctions.

1. Changing the Game in Strategic Sourcing at P&GExpressive Competition enabled by OptimizationDinesh Pradeep | Ramakrishna krishnaswamy | Sunayan PalLavanya Divi | Arun Kumar S | Amit Kumar

2. Two moments of truthWas the experience satisfying enough?Will it be a P&G Product?

3. ComplexitiesSourcing - EvolutionWin-Win deals

4. Slow

5. Lacks Transparency

6. Low levels of competition among suppliersIssues with Reverse AuctionsPoor Allocation Decisions

7. Optimal bundling based on suppliers preferences and not buyers

8. Side constraints not supported

9. Buyer cannot express business rules

10. Suppliers cannot express production efficiencies – Exposed to bidding risks

11. Amount and type of information provided by suppliers reduced

12. Suppliers forced to cut their profit margins

13. Suppliers not allowed to compete on their strengths through collaboration with the buyers

14. Buyers lacked adequate tools for balancing cost savingsCombineNet REVCombineNet’s REV – An industry-independent optimization-based market-clearing engineP&G’s ApproachBusiness Rules and Stakeholder preferences

15. Limiting the total number of suppliers

16. Bundled Offers

17. Conditional Volume Discounts

18. Innovative Alternative Item specificationsInitial BenefitsAroma Chemicals Purchase300 items and numerous suppliersSavings upto 13.5 %Reduction in the number of suppliersQuantitative understanding of the cost of business rulesExtended it to six sourcing eventsSavings of about $100 mn

19. Expressive CompetitionExpressive Competition – The Paradigm ShiftExpressive AllocationEvaluationExpressive CompetitionExpressive Bidding

20. Expressive BiddingSuppliers bid on an arbitrary number of self constructed package of itemsSuppliers offer rich forms of discount schedulingSuppliers can offer conditional discountsSuppliers can specify a broad variety of side constraintsSuppliers can bid using attributesSuppliers can express free-form alternatesSuppliers can express detailed cost drivers

21. Expressive Allocation EvaluationI don’t want more than 200 winnersBuyer can express

22. Operational Constraints

23. Legal Constraints