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10 Questions With CombineNet [Interview]

10 Questions With CombineNet [Interview]

Today Xeneta brings you the first of a series of interviews featuring prominent companies or individuals in international trade and logistics. Today’s interview is with Mr. Gregory Holt, Director of Product Marketing, CombineNet.

combinenetQ: Tell us about CombineNet:

We provide advanced e-sourcing technologies that improve the efficiency and profitability of different businesses. Our E-sourcing technology is very different than others offered in the industry, plus we offer Contract Management and Spend Analysis that enables management to pull the data they need by product, by division, or however they want to see it.

We cover many industries, but are strongest in Retail, Food & Beverage manufacturing, Consumer Packaging Goods manufacturing, and Restaurants. In general our clients are billion-dollar global companies where the common factor is their reliance on an efficient, cost effective, and low-risk supply chain as a competitive advantage.

We’ve been in business since 2000, and are headquartered in Pittsburgh, PA (USA) with European offices in London and Hamburg plus partnership arrangements in Asia and Latin America.

Q: What makes CombineNet different than others in your field?

Probably our ability to combine math and computer science with business realities. We use patented optimization algorithms for market-clearing, meaning we use math to find the right connections between buyers and sellers based on a number of supply and demand factors. It’s important to remember business is more than just pricing negotiations; it’s using the availability (or not) of trucks and containers to move cargo, the alternative options that suppliers can bring to the table, at prices acceptable to both on schedules also acceptable to both.

Q-So ‘timing’ can be as important as price? How does this work in e-sourcing?

That’s what makes our system different. For example, shipping has peak and non-peak seasons, where transit time might be more important than price. Our system allows a carrier to make multiple offers, where a direct shipment takes 22 days and costs “X”, while a trans-shipment takes 28 days and costs “X less 5%”. Maybe the buyer books 25% direct and 75% trans-shipped? It gives both sides the flexibility to maximize their resources.

Q-Does Expressive Bidding offer other options?

Absolutely. It also gives both the buyer and seller the opportunity to tweak the RFQ’s in a way that helps both. Use sugar as an example; while a standard quote may include requirements for a certain color or granulometry, perhaps the supplier can offer a different grade with a more varied color or grain size for substantially less money? Or ship that grade to plant that can use it instead of high-grade? It’s a maximization of resources that benefits both the buyer and supplier, creating supply chain efficiency as well as cost effectiveness.

Q: Isn’t offering a slightly different grade of an item the vendor thinks the buyer can use a matter of common sense and good business?

It is, but it’s also using algorithms to prove the efficiency of what past purchasing managers ‘knew’ but couldn’t quantify. It’s also using technology to run various scenarios on purchasing and shipping that prove or disprove the effects of a purchase before actually committing to it.

Q-And this is important?

Yes, in the early days of e-bidding, it was very cut-and-dried; companies faxed or emailed the RFQ and the prospective vendor filled in the price. But the problems caused by non-shipments, or unqualified vendors winning bids, gave e-bidding a bad reputation. Our system enables a trucking company with 100 trucks, for example, to offer different prices for using say 20-30 or 70% of his trucks; this enables the buyer to decide how much of the trucker’s capacity he thinks is wise to use.

Q-Does e-sourcing work in sourcing basic raw materials such as metals, chemicals, or grains?

Certainly. If it’s traded on a terminal market those are transparent prices, but where we can be of use is in the shipping, logistics, value-add, and contract terms; these items are essential to production, so getting them shipped and delivered on a timely yet competitive basis is of vital importance, and through Expressive Bidding, suppliers can offer additional options to drive value or reduce costs.

Q- Most billion-dollar and billion-Euro companies reached this size long before e-sourcing; why do they need CombineNet?

Because they captured the low-hanging fruit of aggregated purchasing long ago; we help them cut costs and increase efficiency they’d not have found or addressed otherwise. Remember, reducing the cost of goods sold and more efficient logistics is a sales-multiplier.

Q-Does E-sourcing take the personal touch out of business?

Not at all; our Flexible Bidding enables the buyer and seller to have a much or as little contact as they desire. What we do is provide the software that enables the buyer and seller to best answer the question “how does my company best support your business?”

Q- Any final thoughts?

Yes; it’s important to remember that e-sourcing does not replace negotiation, but rather enhances them.

Xeneta thanks Greg Holt and CombineNet for their time!

Thought for the week: “Be smart; the pressure to make sound and timely decisions has never been greater”

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