Sramana Mitra: What are the nuances of that? How do you accomplish that objective?
Rob Bonavito: It’s a special algorithm that looks at multi-stage optimization. It you think in terms of someone that’s making a cake, you could potentially buy a cake pre-made. You could have several options in terms of ingredient providers and also service providers that would play into the whole supply chain. To be able to determine which route or supplier would provide the most cost effective solution, it takes a series of analysis that goes through an optimization algorithm.
It does that work for you and comes out with the conclusion and the substantial benefits that you derive.
Sramana Mitra: Is this a part of your offering?
Rob Bonavito: It’s a part of our offering. It seems to be a huge area of interest. Like I said, there are probably less than 200 manufacturers or major corporations around the world that are using it today.
Sramana Mitra: These 200 odd manufacturers who are the forefront of this trend, what verticals do you see them in?
Rob Bonavito: They’re food and beverage, transportation, large manufacturers. There’s also large transportation providers who are using this solution as well.
Sramana Mitra: Could you double-click down on that and walk us through a couple of use cases from different industries on how specifically people are playing in this trend?
Rob Bonavito: Take for example Procter & Gamble. They have a huge amount of spend. They have direct and indirect spend. Then they have what they call a center of excellence where they look at the biggest ROI they can provide. This group uses advanced sourcing optimization to evaluate the supply chain and all its different entities and be able to put this into an algorithm and run events off that that gives them the optimal cost savings, which is not always the upfront price.
They take into account quality. They take into account all these different variables. Through this algorithm, they run these events and determine which is the most cost effective choice that they can make. The savings are very significant. They’re not a typical sourcing event where you talk to a couple of suppliers. These are very sophisticated ways of analyzing the entire supply chain and making the best choices for your organization.
Sramana Mitra: What kinds of numbers are we talking in terms of ROI?
Rob Bonavito: It can range anywhere from 15% to 40% depending on the type of analysis they’re doing and how complicated that company’s particular supply chain is.