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Tactical Sourcing: Supply-chain execution in high volume, transaction-driven markets where buyers must solicit vendors and make sourcing decisions for every transaction.

Examples of tactical sourcing are the purchasing of commodity/standardized products for distribution, sourcing of many industrial feed stocks, and tendering of freight. Common characteristics of these markets are:

• off-exchange
• cash markets
• near real time exchange of bid/ask data between trading partners
• delivery and acceptance of offers in near real time
• transaction document exchange and confirmation at the business (rather than administrative) level
• notification to outside systems that a transaction has occurred (in some cases)

In order to achieve high user productivity and adoption rates, workflows need to be highly adapted to the industry and enterprise, and support for industry trading assumptions, customs, and terminology is required.

BuyMetrics is designed for tactical sourcing. It meets all the requirements above with an optimized workflow that produces dramatic improvments in productivity and effectiveness.

Alternatives to tools like BuyMetrics only meet part of the requirements for tactical sourcing. For example, industry-specific posting/auction systems lack workflow and integration capabilities, so they attract interest but not high volume use. Generalized replenishment/purchasing system don't support high volume, real time solicitation of vendors and analysis of bids on a transaction basis. Tools designed for complex sourcing or MRO typically lack the industry-specific assists and metrics required for transaction-level decision making and are too cumbersome for the one-to-one sourcing to transaction ratio. Sub-hour cycle time is difficult to achieve with these tools, and the lack of, or force-fit of, industry terminology onto generalized platforms also limits user acceptance.

The table below compares Tactical Sourcing to other supply chain models.

Sourcing and Procurement Models

	Replenishment	MRO	Tactical Sourcing	Supply Chain Sourcing	Complex System Sourcing
Product Types	Typically branded	Wide range	Commodity	Non-commodity	Unique specification
Product Specs	Vendor SKU	Mix of commodity, branded	Typically defined by a standard	Complex, industry formats	Complex, custom format
Value of sourcing decision	High	High	Low	High	High
Value of single transaction	Low-Medium	Low	Low-Medium	Medium-High	Very High
Frequency of sourcing decisions	Done in Sourcing	Done in Sourcing	High	Low	Very Low
Volume of transactions	High	High	High	Medium	Very Low
Term of commitment	Contracted term	Contracted term	Single Transaction	Medium-Long term	Life of System

Case Study

It is common in the commodity lumber space for a single buyer to source 30-50 transactions per day, each from group of 6-10 suppliers, with a total of 40-80 suppliers contacted during the course of the day. The average transaction value will be less that $10,000, but collectively the transactions will represent 40-50% of their company's cost of goods sold.

BuyMetrics has been deployed for 12 years as the leading tactical sourcing solution in the commodity building products space, where five of the largest eight retail distributors in North America, as well as a number of smaller companies, use it to source their commodity lumber and panel products for resale. It is also used for special order and custom bid coordination with vendors in several instances. Over 600,000 transactions have been executed since 2000 with a value over $7 billion.