On this week's show we're digging into the world of direct materials sourcing. It's a part of the digital procurement landscape that's been a bit neglected, except for e-sourcing tools, and my guest this week decided to do something about this.

Anne-Sophie Le Bloas, Founder and CEO of Ravacan, experienced in both her native Europe and also in the US, that there wasn't much innovation out there when it came to leveraging digital tools to manage direct materials spend, and set out to remedy this.
Creating visibility, analytics and clarity in the direct materials space
Part of a rare breed, Anne-Sophie is a fellow ex-Procurement Category Manager turned startup founder. She studied Procurement and Supply Chain in Bordeaux and then moved into the corporate world, starting out in the FMCG industry, moving then into aeronautics and then finally the automotive industry.

Against this backdrop, there is a lot of focus around specification and quality, while at the same time ensuring cost reduction. Engineering and technical decisions are key, but at the same time there is a lot of pressure on cost, especially in lower margin industries such as automotive.
Is it hard to get conversations with innovators and change agents?
Traditional manufacturing is an industry where change often happens very slowly and is difficult to drive innovation and different ways of doing things. I was therefore curious to understand whether Anne-Sophie had experienced challenges getting traction if she is selling software into these types of businesses.

She admits that there have been challenges, but also says that she tried to target the innovators and change agents within these businesses. The COVID-19 pandemic has definitely helped to accelerate the appetite for change and embracing potential new ideas, partly as a result of supply chain shortages, inflationary pressures and longer lead times.

The ability to be able to make decisions faster and to have the bigger picture at your fingertips has been a key factor in driving acceptance of using software. Moving to a remote working environment during COVID meant that previous interactions that would take place within a production plant no longer could, if white collar functions such as Procurement and R&D were working from home.
What's wrong with managing directs within an ERP?
Understanding knock-on effects and having predictive models to be able to evaluate this impact on the overall supply chain is key. This is something that's very hard to do from within an ERP system.

For example if a COVID lockdown closes down a factory in a certain part of the world, how can you model this from within your ERP or using a spreadsheet? Asynchronous ways of working are too slow. Data may have changed by the time you have tried to update and work collaboratively on an Excel and email-based project.
Managing multiple tiers of supply and directed buys
Direct material supply chains often have added layers of complexity, where you need to understand relationships beyond your 1st tier suppliers. Anne-Sophie cites the example of the consumer electronics industry where contract manufacturing is normal and the Tier 1 supplier is really just a gatekeeper to a number of external manufacturers.

It's also quite common in some industries to have "directed buys", where the end customer dictates to a Tier 1 supplier where to buy certain components to buy from further down the supply chain.

Having the ability to track your BOM electronically, through one platform, gives a whole new level of transparency and visibility.
Leveraging AI to capitalise on savings and limit price impact
With constant price fluctuations in direct materials, there is also an AI element built into the software which allows for intelligent switching of suppliers in the case where components are dual-sourced.

Getting the mix right based on capacity, price, lead time...