Silos Changing: Cambashi explores emerging technologies now transforming purchasing

Posted on 22 Feb 2012 by The Manufacturer

Experts at industry analyst and market consulting firm Cambashi contribute a regular blog for TM titled ‘Silos Changing’. Each week this explores how new software applications enable manufacturers to implement business initiatives in the new economy.

Mike Evans discusses enterprise application deployments that make it simpler to buy products.

Mike Evans, research director , Cambashi

Business to Business (B2B) Internet commerce is booming. It often has two phases. In the first phase, the designer of a product looks to source a part that will be designed into the final product. In the second phase, procurement will seek a trade-off between price and other factors, such as availability.

B2B buyers are sophisticated types and buy according to rules. Suppliers tend to be approved in advance of any individual transactions, but lots of factors drive supplier approval. Customer service reputation, as well as the time and effort needed for transactions and payment are just as important as price.

Before the Internet, part manufacturers’ sales reps met design engineers in their lobbies. Parts were chosen from paper catalogues — expensive to produce, often out of date and strewn with minor errors that wouldn’t be fixed until the next printing.

B2B e-commerce too often uses an on-line catalogue – at least it will be more accurate – since procurement departments favour in-house catalogues aggregating the catalogues of approved suppliers. But the constraints this imposes on designers may lead to them using catalogues from product manufacturer websites, perhaps aggregated by an intermediary.

The designer knows the category of the part, functional parameters and a few potential approved suppliers’ names.  They select on functional performance, price and prefer a part already in use in other products.

So manufacturers and distributors are building on-line catalogues. But what are technology companies doing to improve the functionality of these catalogues and develop products that make the process of sourcing and buying parts simpler for manufacturers?

Some general functionality, particularly oriented towards the Electronics and High Tech industries, comes in PLM systems from Dassault Systemès, PTC and Siemens; as well as from ERP suppliers such as Infor and SAP.

Other more specialised software applications co-exist with these. Catalog Data Solutions. is a leading provider of Software as a Service (SaaS) product search and configuration solutions.  It enables about 100 industrial companies to hold their product portfolio as an on-line catalogue accessible from anywhere.

This product has a sophisticated rules based engine that allows the user to find a part with particular attributes.  Rather than browsing in the traditional hierarchical organisation of a paper catalogue, the user inputs attributes and obtains a subset of parts that match.  It is possible to set nested rules, so for example, if material A is chosen at one stage then part B is not a valid choice from then on.

The software can look up information in other enterprise applications such as ERP and Document Management to provide CAD geometry, information on availability and technical data sheets. It allows users to link outputs to social media to aid collaboration between design partners.

From the part manufacturers’ point of view, making it easy for the designer increases the chance of volume purchases when the final product goes into manufacturing.  John Major, CDS CEO says, “A supplier’s website that delivers CAD geometry for the envelope of the part leads often to a sale once that design goes to market.”

Electronic catalogues do make life easier for both designer and manufacturer.  However, we are still generally at the stage where the designer chooses the supplier first, and then the part.  In the future we expect that there will be new intermediaries that let the designer specify the parameters of the part first, then compare the offers of multiple suppliers.

CDS Catalog Solutions’ search site, 3DModelSpace, is an example. It provides CAD models of many common parts. We expect that this type of business will expand, probably in vertical industry specific sites, where terminology and assumptions will make life even easier for designers.  If on-line catalogue suppliers can select on commercial as well as technical criteria then they might also help procurement to indicate approved suppliers.

In future blogs we will go on to talk about other potential deployments that respond to more savvy consumers, such as making it possible to try and then buy.