Advanced
Optimization Technology to Enhance Business Decision
Making
| Partnering
Organization: |
CombineNet,
Inc.
Pittsburgh, PA
|
| Project
Duration and Cost: |
- 2002-2005
- ATP
funding amount: $
1.8
M
- CombineNet
cost share amount :
$
0.1
M
|
| Project
Brief: |
00-00-4629 |
| Status
Report of the Completed Project: |
None |
The
Challenge
In business-to-business (B2B) e-commerce, on-line auctions are becoming an increasingly
important tool for procurement. Because on-line auctions can make transactions
more efficient, they can enable significant cost savings for an organization.
A more sophisticated (and even more efficient) type of on-line auction is a combinatorial
auction, but the task of sorting through all of the bids to achieve an optimal
combination is extremely complex, and the addition of constraints to deals further
complicates the task. CombineNet proposed to develop new algorithms to address
this critical bottleneck, but this 2-year old startup could not find investors
willing to fund this high risk project. In their proposal to ATP, CombineNet
proposed an innovative approach with high technical risk that had large potential
economic impact, enabling U.S businesses to achieve greater efficiencies, increased
liquidity, reduced risk, and increased speed to market.
|
Technical
and Economic Impacts
Through
the ATP project, CombineNet developed a set of technologies
that support complex, large-scale problem solving for combinatorial
exchanges, which they incorporated in their REV™ product.
CombineNet
has applied the ATP technology in over 100 real-world
procurement events with a total transaction volume
of $10.5 billion, which has yielded savings
for their customers of over $1.3 billion (that is
just for projects that used technology developed
under their ATP project). CombineNet
customers operate in many different industries, so the
impact has been very broad. Some examples show how this
technology has had an impact:
- A
Fortune 100 chemical company transformed their
transportation sourcing using CombineNet. They achieved
cost savings of over 28% and shortened procurement
planning and execution cycles from 9 months to 4
weeks.
- A
consumer packaged goods company was able to design
a corporate-wide, collaborative sourcing strategy.
As a result, they were able to save $75 million,
generate analytical results in seconds instead of
days, and significantly consolidate procurement
cycles.
- A
leading food manufacturer was able to optimize
ocean freight transport sourcing. They achieved
savings of over 11%, while also increasing supplier
participation by 100%. This example in particular
shows the tremendous spillovers generated by
this technology: the ATP project helped enable
benefits for CombineNet, which enabled benefits
for its customer, which enabled benefits for
its supplier.
Numerous
technical and knowledge spillovers have resulted from this
project as well. CombineNet has multiple patent applications
pending and has presented the results in numerous publications
and presentations at conferences. The Institute for Operations
Research and Management Sciences recognized the technical
achievements of the project by selecting Procter and Gamble
(and its partner CombineNet) as a finalist in 2005 for the
Franz Edelman award1,
which acknowledges “outstanding examples of innovative
operations research that improve organizations and often
change people’s lives”.
1
http://www.scienceofbetter.org/Edelman/index.htm
|
Date created: July 29, 2005
Last updated:
August 21, 2006
|
