The BOMweb Optimised Sourcing Platform has four key modules, as follows:

:: Total Cost of Ownership (TCO) Modeling

Early adopters of 'value based sourcing' principles are clearly reaping the bottom line benefits of this approach. However, the move away from cost-based sourcing comes with new complexities. One of the most challenging aspects of the value-based sourcing approach is the need to develop sophisticated Total Cost of Ownership (TCO) models for key spend categories.

In addition, an accurate TCO Model is the foundation of an Optimised Sourcing approach and is often the difference between creating significant new value or delivering an average result. Optimisation and advanced bidding strategies will only deliver the very best outcomes if the buying organisation understands early on in the process what a best outcome model looks like.

TCO Modeling is a 'developmental skill' in most organisations, but the principles are easy to understand. A good TCO Model identifies all acquisition costs and lifecycle costs associated with a particular spend category. This is relatively well understood in most organisations.

But, the TCO Model is much more than that. Firstly, there is an important link between the technical requirement and the TCO model. This allows the buyer to make informed specification tradeoffs with insight into the TCO impact. Also, the TCO model should include an analysis of the risks and risk mitigation strategies in switching to a new supplier or new supply option. The cost drivers and cost metrics identified in the TCO Model are included in an Expressive RFQ in the form of price variables and bid attributes. So it is important to develop the model before going to market. These cost drivers are input into the TCO Optimisation engine to find the lowest total cost solution once the supplier bids are received. In addition, various supply models/configurations and the total cost impact of each are identified upfront before market engagement. Finally the TCO Model is the backbone of a good negotiation strategy and the supplier performance management system.

:: Expressive Request For Quote (RFQ)

The Expressive RFQ tool is a flexible web based interface for suppliers that effectively gives them secure access to the input stage of the TCO Optimisation engine. In addition, the Expressive RFQ tool links directly into the cost drivers from the TCO Model developed in the previous stage. By coupling the TCO Model and the Optimisation Engine with a secure web based interface for the supplier, we can reduce considerably the cycle time in getting to the best value outcome. The buyer can identify the value creation opportunity flowing from innovative supply configurations in seconds rather than days and weeks.

Qualified suppliers are invited to logon via a web browser anywhere in the world. The intuitive user-friendly interface allows the supplier to quote against all pre-specified requirements and to create new supply options by changing the lot attributes, lot volumes and lot packages to suit their business. In this way they can offer the very best deal on a new option that minimises their total cost. In this way the supplier reduces the buyer's total cost by re-configuring the supply solution rather than squeezing their margins.

The Expressive RFQ allows the suppliers to submit multiple quotes for each lot by varying a quote attribute such as quality, or delivery terms each time they submit the quote. Unlike the auction interface, the Dynamic Feedback Dashboard is disabled so suppliers have no visibility to their relative competitive position. This is in keeping with a true sealed bid process.

:: Total Cost of Ownership (TCO) Optimisation

The TCO Optimisation tool is a powerful web based application that allows the buyer to ask the tough 'what if' questions and find the absolute best value supply configurations.

The optimisation engine is designed to allow the buyer to 'flex' all possible drivers of total cost, and to then re-calculate the optimised value solution in seconds.

Unlike traditional spreadsheet based analysis methods requiring complex pivot and look-up tables, the TCO Optimisation tool can test different scenarios in seconds. For advanced users, the optimisation tool enables real-time combinatorial analysis to test millions of possible bid package options. The combinatorial optimisation capability is beyond even the most sophisticated spreadsheet models and gives new insight into supply configurations that can reduce total cost without squeezing supplier margins.

The core of the TCO Optimisation tool is a powerful real-time optimisation engine that has been custom designed for sourcing and supply chain specific applications. The optimisation engine has been developed within a .net programming language environment on a dedicated SQL 2005 database platform.

The TCO Optimisation tool is a proven value multiplier and can scale to any supply chain configuration problem including transportation sourcing involving millions of lane permutations and combinations.

:: Expressive Auction

The Expressive Auction tool is the first web based 'combinatorial auction' system with dynamic bid feedback available in Australia.

Build on the same philosophy as the Expressive RFQ, the auction tool allows suppliers to bid their lowest total cost price and non-price attributes. Unlike the sealed bid RFQ, bidders in an Expressive Auction can view a 'Dynamic Auction Dashboard' that is updated in real-time. The dashboard gives each bidder complete transparency about their relative competitive position on all price and non-price attributes, and a real-time Target Bid to guide their preference selection and bid strategies. A key feature of the auction engine is the inclusion of a patented Target Bid algorithm that calculates in real-time each bidders unique 'next target bid' to compete against the lead bidder and the lead option.