| Inventory control is critical to running a profitable | | | | own pre-qualified suppliers across the country. It |
| business. Excess inventory ties up cash not only in the | | | | eliminates the need for excess inventory, because it |
| goods that are sitting in warehouses but also in what | | | | allows the buyer to control precisely when and what |
| has to be spent for space to store the items and | | | | to order, knowing that there are always pre-qualified |
| related insurance and other overhead costs. There | | | | suppliers in its network that are waiting for the |
| also is the risk of decreased demand for inventory | | | | opportunity to produce the product or service. |
| already purchased. | | | | Additionally, and this is a key point, The new method |
| One of the first to realize the value of inventory | | | | makes it possible to reduce significantly the actual cost |
| control was Ford Motor Company founder Henry Ford | | | | of the goods or services. In fact, the cost reduction in |
| who wrote in his book, My Life and Work (1923): "We | | | | organizations using this method is 25% to 50% greater |
| have found in buying materials that it is not worthwhile | | | | than that obtained using other competitive means |
| to buy for other than immediate needs. We buy only | | | | (such as negotiation, rate cards, spot bidding and |
| enough to fit into the plan of production, taking into | | | | auctions). A reduction in the costs of |
| consideration the state of transportation at the time. If | | | | specification-defined goods and services at this level |
| transportation were perfect and an even flow of | | | | equates to a significant increase in profitability - to the |
| materials could be assured, it would not be necessary | | | | extent that 1% and more of total revenues migrate |
| to carry any stock whatsoever. The carloads of raw | | | | from cost lines to the bottom line. Since 6% to 30% of |
| materials would arrive on schedule and in the planned | | | | the operating budget of a typical organization is spent |
| order and amounts, and go from the railway cars into | | | | on specification-defined goods and services, the |
| production. That would save a great deal of money, | | | | opportunities for measurable cost reductions are |
| for it would give a very rapid turnover and thus | | | | enormous. |
| decrease the amount of money tied up in materials. | | | | This new approach supports improved inventory |
| With bad transportation one has to carry larger | | | | management while changing the process from one of |
| stocks." | | | | a supplier determining pricing for the buyer based on |
| Ford's insight is even more applicable today because | | | | what the supplier perceives to be the price the buyer |
| of improvements in transportation, production and | | | | is willing to pay, to a process by which the supplier |
| communications. Not in his wildest dreams would Henry | | | | submits prices based on its own production needs with |
| Ford have envisioned what we can do today with | | | | the buyer selecting the lowest price among qualified |
| controlling inventories via computerization and new | | | | suppliers. The buyer achieves optimal scheduling |
| business methodologies. | | | | benefits and cost reductions, while revenues and profit |
| Such a methodology exists, and it applies to any | | | | for suppliers increase as suppliers fill their downtime |
| goods or services that are specification-defined when | | | | with contributory revenues. It is win-win for all involved. |
| ordered. Commercial print, construction services, direct | | | | The scope of this patent is very broad and powerful in |
| mail, labels, machined parts, marketing materials, | | | | its application to the automated procurement of any |
| product packaging, temporary staffing, textiles, | | | | customized or specification-defined product or service. |
| transportation and trucking are some of the most | | | | The method is not simply the computerizing of an |
| obvious examples of specification-defined goods and | | | | existing methodology. Rather, it is the invention of a |
| services. | | | | novel process that had not been found anywhere in |
| Basically, the new method allows the buyer, using a | | | | prior art when the patent application covering this |
| web-based computer-operated system, to identify | | | | invention was filed by e-LYNXX Corporation on |
| pre-qualified suppliers that can produce a product or | | | | November 30, 1998. During the intervening 10 years, this |
| service on demand through a competitive pricing | | | | approach to procurement has likely been implemented, |
| process. Identification comes through an automatic | | | | and, if so, would now be covered by the business |
| matching that occurs after each supplier's capabilities | | | | method patent. e-LYNXX was awarded the patent on |
| and other attributes are entered into a computer | | | | November 11, 2008, and is in the process of licensing it |
| operated system and then matched against the | | | | to organizations in the United States. e-LYNXX is |
| buyer's product or service specifications that were | | | | finding that organizations are very receptive to |
| also entered into the system. In essence the computer | | | | licensing a process that can bring them significant cost |
| system identifies those pre-qualified suppliers that can | | | | reduction benefits in an economy where cost savings |
| meet the specification requirements and then sends a | | | | are being wrung out of nearly every aspect of doing |
| request for pricing to each of them. | | | | business. |
| This creates a virtual pipeline to and from the buyer's | | | | |