Steve Markle

Steve Markle, product manager for strategic sourcing at Ariba, pointed to several specific areas of upgraded functionality in the Ariba platform, including spend analysis, reverse auction, sourcing project and direct materials sourcing capabilities.

In terms of spend analysis, Ariba now has integrated Softface's data cleansing and data enrichment technology into its Analysis solution, as well as provided more direct-materials reports and data models, to allow its customers to do direct materials piece price and part variance spend analysis as a way of prioritizing their subsequent strategic sourcing activities.

On the Ariba Sourcing side, the provider has included reverse auction and sourcing project capabilities that they brought over from the legacy FreeMarkets products.Markle said the goal here was primarily to accelerate event and auction throughput through the Ariba product, something in which FreeMarkets was ahead of Ariba."FreeMarkets was the market leader in terms of sourcing services and strategic sourcing, so it's really bringing it together and unifying our capabilities from both a sourcing services standpoint and a strategic sourcing technology standpoint on a single unified platform," Markle said.

Ariba has also incorporated functionality for direct materials sourcing with an eye toward the needs of sourcing specialists in the automotive industry, adding, for example, the ability to do highly sophisticated reverse auctions using non-price factors, or total system cost factors, for piece parts that potentially are going to go into automobiles.When category managers source these types of parts, they generally ask their suppliers to give them visibility into all of the price factors, such as piece part price, tooling and so on.But they evaluate the price factors through net present value, asking the supplier for a percentage reduction on all those cost factors over time, and then discounting the reduction back into the present to do the competition evaluation for that part.The new functionality in the Ariba platform facilities that process, and Markle added that these capabilities are applicable not only to automotive but also to large capital purchases.

The feature pack also adds reverse Dutch auctions to Ariba's lineup of sourcing options.These auctions are useful when a buyer wants to obtain the absolute lowest price that a supplier might offer for a particular commodity.The buyer gradually raises the price that she is willing to pay until enough suppliers have responded that the buyer has met her volume requirements."Buyers can save money but also time, because if they choose the correct floor price, they can fill all their volume immediately, and then move to the next item," Markle said.
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Markle said that Ariba already has a set of customers in the implementation phase with the feature pack, and Blumberg said that the company already has signed several QuickSource customers up to transition to the Ariba platform.
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Moving forward, Markle said that Ariba is looking at incorporating deeper reports from the legacy FreeMarkets apps into the Ariba solution, adding service-related requirements to the unified platform, and implementing optimization capabilities for the sourcing decision-making and decision-support process.