The Point

Most of us ask the 'what if' question to ourselves about many of our personal decisions. "What if I eat another piece of cake?" "What if I take this job?" "What if I say yes to.....". For such a small word, "if" carries a lot of weight.

In the use of optimization for your analysis of a procurement bid, using "what if" scenarios also carries a lot of weight. In this week's featured eSourcing Wiki article, we introduced the idea of Optimization. 

For anyone that has ever run an eSourcing project, there is a typical flow that most processes follow. The project kicks off, and everyone’s focus is split between costs and known issues with the incumbent suppliers(s). Procurement uses historical spend to put together a list of line items with quantity and specification data. The company’s standard list of supplier questions is loaded into the eRFX system, along with any additional questions for suppliers that relate to the category of spend in question or new developments in the industry being sourced from. Everyone works frantically until the day the RFP opens and then – you wait. The project comes to a complete standstill for the two weeks (e.g.) that the RFP is open. Then the mad dash begins again as you wade through and evaluate supplier responses, pricing, and attachments.

Everyone loves the path of least resistance. How can we get to that restaurant easier, without crowds or lines?  Is it possible to get my 2-year old to bed at a reasonable hour with or without a bath? Can I publish this RFP today - but it is Friday and I want to start my weekend. 

If any of these are too difficult, we will avoid them all together. Stay home, order pizza to be delivered, delay the baby's bedtime routine and wait until Monday for the RFP. So why does this week's blog pick help you out?   

Whenever I see something that is titled "Back to Basics" I almost groan. That is like the latest secret to loosing 20 pounds. Here it is - Fewer calories in and more calories out. Really? Like diet and exercise are anything new?

We are so swept up in the immediate, we often can't step back and refresh to look at the whole picture. So that is why it is important from time to time to return to the basics.

The featured speaker on this event was Jacob Gorm Larsen, head of eSourcing at Maersk procurement. I’m almost always impressed by the key speakers on these webinars, but Jacob is the first speaker that I would absolutely want to work with. You can watch the on-demand version of the webinar by clicking here. If you are interested in doing some additional reading, you can check out our Wiki-Wednesday page on Mathematical Optimization or our blog post on Optimization in the Real World.

This week’s Wiki-Wednesday topic is Mathematic Optimization, and that article is the source of all quoted text below. We are covering it because of the CombineNet/Procurement Leaders/A.P. Moller – Maersk event on taking strategic sourcing to the “next level”. For many companies, whether they have implemented a strategic sourcing solution or not, optimization functionality may take a little longer to make use of, both because it is a more complex part of the software but also because the categories that can truly make use of optimization are not low-hanging fruit.

You can read an excerpt from the Wikipedia page on mathematical optimization here, but I am going to take this opportunity to break it down and use examples from procurement/sourcing.  The article starts with a straightforward definition of optimization as “the selection of a best element from some set of available alternatives”.

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