The following case study interview was carried out between Market Dojo and Bruce Beavis, of Beavis Consulting. Market Dojo asked Bruce a number of questions about his usage of Sourcing Dojo. Read Bruce’s responses below;
Could you tell me in your own words, a little bit about Beavis Consulting, what your role is and what your key objectives are?
I’m Bruce Beavis of Beavis Consulting and I’m a single practitioner for supply chain and procurement consulting. I work primarily in the manufacturing space with a variety of mid-market clients that I generate through my own network or through private equity type contracts. Generally what they’re looking for is how they can jumpstart an improvement program. How can they generate immediate savings to reinvest in the business and get the virtuous cycle going? And that’s the thing that I work with quite often. What I often find is they’ve not implemented their ERP correctly.
And so I do a fair amount of work often in the basic P2P transactional side, as well as looking more at the whole negotiation contract and short cycle. But also logistics, warehouse management, and I’ve got a background in a manufacturing ERP.
So how did you hear about Sourcing Dojo?
I heard about Sourcing Dojo through my contacts at my previous employer.
It was a tool that they had already identified as being extremely useful on projects. It had already been used in Australia and New Zealand however it had not been used at all in North America. So I was instrumental in bringing it to the North American practice.
What types of projects did you have in mind when you introduced Sourcing Dojo to your North American practice?
So to give an example with a client this was particularly interesting. They were in the building products industry, and they had no real procurement or sourcing infrastructure. They had multiple plants, and all purchasing was all being done on a plant level. The prevailing belief structure was that the plants were doing a great job of sourcing and there were no further savings to be found. As a consulting team, we were somewhat forced on them by the corporate group. Initially there was some hostility, as they didn’t believe there was any opportunity there.
So with this example, what benefits did you find from Sourcing Dojo? And how did they compare to your expectations?
Well, to be honest, we found far more savings than anyone dreamed were there, certainly on the client side. I suspected that we had a very strong savings case following a two week diagnostic phase. I saw all the indicators of large unrealized targets, however you don’t know exactly what opportunity there is, until you go to market with an RFQ.
Through using Sourcing Dojo with the client we got close to 50% savings on several packaging categories, and there was more available on the second pass.
The team was buying wrap for pallets, strapping, plastic poly bags, shrouds that would go over pallets as well as other plastic sheeting. In some cases, they had 25 year relationships with the distributors they were buying from whereby the distributors provided them with “free equipment” to wrap the pallets, so naturally they thought they were getting a great deal. However, due to the length of the relationship and lack of market research, they had not checked the market value of the items they were buying for two and a half decades. Equally, the grade of wrap was not considered, in terms of the performance characteristics, because it’s actually an engineered plastic product. They were fundamentally just buying the stuff off the peg, paying whatever the distributor dictated, and unfortunately this existed in every single plant.
You can usually get 10-20%, if you go from the distributor relationship to a direct manufacturer relationship. The manufacturer is interested in getting involved if you’re buying $1million worth of anything. I also knew that the price of polyethylene had dropped about 20% in price over the last four or five years. Also with packaging, it’s an area where there’s always improvements in innovation that improve performance or improve costs.
We put a lot of upfront effort into analyzing the category and understanding the technical specifications. One of the most difficult things to do when you’re including an RFQ, especially for a technical item is to ensure you know what the specifications are and that you have it right.
I think it was a great example of taking a category that was just completely and utterly unmanaged from both a technical and commercial point of view, and then putting it on the right track using Sourcing Dojo and knocking 50% of the cost out. We did that across four packaging categories.
Sourcing Dojo was critical to the effort. It really helped us communicate to all players that the old days were over, and going forward we were pursuing this thing professionally. It created competition that was going to be fair. Everybody was being treated the same. And finally, we were making a market that had both visibility and liquidity in it. With this in mind, Market Dojo was a major credibility builder in an environment that had never seen anything like this.
And what I found really interesting was even the large US packaging companies had never encountered a tool like Sourcing Dojo. I’ve been in strategic sourcing for a long time and been using tools like Sourcing Dojo since 1999. And it blows my mind that Fortune 500 Fortune or 1000 companies have not encountered these things before. It gives you a sense of the potential that’s out there for this type of tool and technique, but also the persistent level of what I think of as business primitiveness.
So I just wanted to touch on something that you mentioned there, you’ve been using similar tools to Sourcing Dojo since 1999, so you’ve got plenty of experience. How would you say Sourcing Dojo compares to those other options in the market?
I would say better in terms of usability. Sourcing Dojo is superior to probably anything else I’ve used in terms of the ability to pick it up and use it intuitively. I think that it’s far more flexible from that point of view.
I have to say, I found Sourcing Dojo to be really quite superior to many of the other offerings in terms of its usability. You can pick it up out of the box and you can get something going in fairly quick order. I think Sourcing Dojo deserves plaudits for making it very user-friendly. I would say that it’s far quicker and far easier to get something up and going than in many of the other tools.
Excellent. That’s great to hear. I can feel the rest of the team blushing from those comments that you’ve made there, Bruce. So one of the things to ask you about on this front is what licensing did you use with Sourcing Dojo and what benefits did you find from our pricing models?
We have the month to month, pay as you go type model. It’s great to have transparent pricing on your website with no hidden fees and the ability to be able to pick it up and drop it to suit our needs.
We found that as consultants working on a variety of projects, that was exactly what we needed and if we had not had that option, we probably would not have been able to use the tool.
So my next question, you’ve touched on already with regards to what categories you have applied Sourcing Dojo to, but are there any others you’d like to mention?
Sticking with the packaging theme, we did a seven-region bid on wooden pallets. We also did an event on specialty chemicals, other direct materials. I used it for mineral products, textile items for consumer sale, electrical MRO and I’ve also done medical supplies and medical devices including a whole range of special, implantable surgical devices like prostate balloons and implantable surgical markers. We got great results on all of those projects.
The client was buying from one of the big distributors in the United States. They were buying something close to $3 million across 4,600 line items, separate SKUs, of which 150 line items comprised 80% of the spend. The spend was not at all consolidated. 200 SKUs for gloves, which come in six sizes, but we also had multiple brands and types of basic medical glove I don’t know if you are familiar with the medical supply chain in the U S but there are a number of GPOs (General Purchasing Organizations). They’re basically agents who will represent a series of customers such as hospitals or medical clinics and they will negotiate a big group contract with the manufacturers for the items. The customer can then buy from that group contract.
Then they have a physical distributor as well and there are three big distributors in USA. If you buy off the group contracts, say you pay 10 bucks and then the distributors will mark up that 10 bucks by around 3% to distribute it, and then you will pay the resulting price. Or you can buy the same thing directly from the distributor at a totally different price. So we ran an RFP where we went out to the three big distributors directly, and then we went out to four GPOs. Those GPOs then would mix and match with the three distributors for the distribution element. Rather than ask the three distributors to bid on all 4,600 items that we went out with a market basket on 150 items.
Due to the complexity, we did not use the Sourcing Dojo advance lots functionality for this, as we were unable to figure out how to make it work! Everything else on that project, we did through Sourcing Dojo, they all submitted their spreadsheets, we did all the communication, the qualification surveys using the questionnaire etc., etc, through Sourcing Dojo.
And then I also did powdered limestone, which is used in mines. I did carbon brushes, which are replacement items when you’re rebuilding motors, The client spent $1million on those.
We knocked 10-15% off each one of those categories. It just takes some organisation. I think in all cases, Sourcing Dojo is a huge time-saver and a credibility builder with the vendor base. That’s where I found a big value, it saves a huge amount of time on the backhand and compiling the results. Also the ability to see the results as they’re coming in is also hugely valuable. You can see if a vendor has made a mistake giving you like the price for one, when they should be giving you the price for 12 in a box. So you can rectify that immediately.
It’s great you can see that as is happening versus two weeks later when the spreadsheets have been compiled and then you find that half of their quote lines are all wrong. So I think from that point of view it’s a big, big help. I also found that the suppliers, once they get over their initial fear, it makes life easier for them in that the communications on what they have to do is structured.
Having done these things in spreadsheets many times, vendors will often restructure the spreadsheet by putting an extra column in or changing the headings. I love the idea of structuring the event how you want it, sending it to suppliers and them having to respond in my structure. Then we can handle all the other interesting and esoteric stuff from some other way. So that’s a huge advantage.
Superb. Thank you very much for that. And so how would you rate the service and solution provided by Market Dojo?
I think that Sourcing Dojo provides incredible value for money. For $775 a month, I think the service is fantastic. And the great thing is, once you’re up and over the learning curve, you don’t actually need that much help since the tool is so intuitive. And I’ve found the online help and support chat really, really good.
I don’t think there’s anything out there that can even remotely approach it in the market. if I’m honest, I’ve not seen anything that even come close to this type of value. If you’re in North America, you’re not going to get instantaneous support at 10:00 PM at night because everyone in the UK is in bed. But, that being said, what do you expect?
That’s great to hear. I’m sure Chris, our Customer Support Manager will be over the moon with that feedback. So, thanks again for that. My next question is what would you say to anyone who’s currently looking for such a tool? And what advice would you give them?
I think Sourcing Dojo should be everybody’s first foray into this space. And I think you’d be an idiot if you didn’t use it. Having seen the dog and pony shows of all of your major competitors, you have no idea of the look and feel and the usability and the ease of deployment or any of those things that are going to be the make or break factors until you actually get your hands on using the tool.
Even if you ultimately have the budget and the desire to go splash several million dollars on a huge sourcing module for and ERP, I’m not sure why you would, but anyway, I would say use Sourcing Dojo for three or four months or even half a year, to get your team up to speed on how these tools work. So then a minimum, you’ll be become an intelligent discerning customer, and you realise what’s important, and what’s just a bunch of marketing smoke. At the end of the day, you may very well decide that all the other add-ons and extra features that you were going to pay millions of dollars for is completely useless.
And then you’re going to achieve at least 80% of what you need just by using Sourcing Dojo. I think that ginormous amount of money goes to waste when buying ERP solutions as buyers don’t really understand what they need because they walk into a segment like this and they’re not familiar with what their real needs are. And they fundamentally mis-assess their own needs. And the capabilities of what the solution provider is providing.
I think you’ve very much answered my next question, Bruce which is, would you recommend Sourcing Dojo to others? I think that one’s been covered, but I don’t know if you have anything further to add?
Yeah. I’m the cheery disciple of this thing. It’s intellectual grist to the mill for any team, any procurement team that wants to get better. I don’t understand why you wouldn’t use Sourcing Dojo. I really don’t. Stop your search right now, just use Sourcing Dojo, get smart and then later figure out do you really need to go and find something different? Maybe just concentrate your efforts on saving some money or making better contracts or something like that.
Another interesting question. Is there a Sourcing Dojo user group, of other disciples and apostles around the world that love the tool as deeply as me? I’m just thinking of companies that have Sourcing Dojo that are using it, where they can communicate and collaborate.
Great question, and thanks for asking. We have recently launched the Market Dojo Community. It’s an open forum for Market Dojo users to discuss their usage of the Market Dojo suite of tools as well as anything procurement. Whether you wish to share best practice, ask other users for hints and tips or request advice on which categories work best at auction, our community page is here for you to get the most out of our tools. You can check it out here.
Find Bruce on LinkedIn here.