Optimizing Strategic Sourcing Event Awards

This chapter provides an overview of the optimization feature and discusses how to:

Select Strategic Sourcing events for optimization.
Run the Optimize Award process.
Review award recommendations.
Review award recommendations by line.
Review the award constraint summary.
Compare award recommendations.

Understanding Strategic Sourcing Optimization

You can use the optimization engine to analyze bids online or by using the batch process—Sourcing Optimization process (AUC_OPT_AE ) by using specific business constraints. The optimization engine will recommend an award allocation based on best price, total cost, or score. You can optimize all events or a specific line by using the online process or the batch process. The optimization process includes all event information such as constraints, bid factors, and costs.

The optimization engine recommends award allocations based on best score, price, or cost while factoring all the constraints. After the optimization engine makes a recommendation, you can:

Accept the recommended award.
Change the recommended award.
Change global constraints, and then rerun the optimization process.

You can still analyze bids and award events online by using the Analyze Events component.

Understanding Optimization Results

When an event is selected for optimization, all price, score, and cost information is sent to the optimization engine for each bid. Depending on whether you have selected to optimize based on price, cost, or score, optimization will calculate the best award allocation based on that selection, while factoring in any constraints that are associated with the event. The optimization engine will give priority to mandatory constraints and higher priority constraints when determining an ideal award allocation. If you optimize by best cost or best price and two or more bidders have the best bid, the optimization engine will use the best score to determine the award allocation. In cases where the optimization engine cannot produce a recommendation without violating one or more mandatory constraints, a message will display on the Review Award Recommendation page. You can navigate to the Review Award Constraint Summary page to view which mandatory constraints were violated.

You can save the optimization results so that you can compare multiple optimization runs to each other to determine the impact of any changes that you made to the constraints or bid factors.

Prerequisites

To optimize Strategic Sourcing event awards, you must:

Have purchased the Optimization Tool.
Select the Use Optimization Engine to Recommend Award check box on the Sourcing Installation Options page (Set Up Financials/Supply Chain, Install, Installation Options, Strategic Sourcing).

Pages Used to Optimize Strategic Sourcing Events

Page Name	Object Name	Navigation	Usage
Select Event	AUC_OPT_EVSRCH_SEC	Sourcing, Maintain Events, Optimize Awards. Click the Select Event link.	Select specific sourcing event awards that you want to optimize.
Optimize Award Request	AUC_OPT_RUN_BATCH	Sourcing, Maintain Events, Optimize Awards	Optimize several sourcing event awards at one time.
Review Award Recommendation	AUC_AWARD_RCMD_PG	Sourcing, Maintain Events, Analyze Events, Review Award Recommendation	View award recommendations after running the optimization process. Note. This page is only available if you selected the Use Optimization Engine to Recommend Award check box on the Strategic Sourcing Installation Options page.
Award Recommendation Results (by Bidder)	AUC_OPT_BID_LN_SEC	Click the Total Award Price link for the selected bidder on the Review Award Recommendation page.	View the awarded lines for the selected bidder.
Event Constraint Limit (by Line)	AUC_OPT_CNT_LMT_S2	Click the Yes link on the Award Recommendation Results (by Bidder) page.	View the constraints that limited the award for the selected line.
Award Recommendation Results	AUC_OPT_LN_SEC	Click the View Recommendations by Line link on the Review Award Recommendation page.	View recommendations for each line item.
Review Award Constraint Summary	AUC_OPT_CST_SEC	Click the View Award Constraint Summary link on the Review Award Recommendation page.	View the constraints associated with the sourcing event and for each line.
Event Constraint Limit	AUC_OPT_CNT_LMT_SE	Click the Yes link in the Event Constraint Limit column on the Review Award Recommendation page.	View the event-level constraints for the selected bidder.
Compare Award Recommendation	AUC_OPT_CMPREC_SEC	Click the Compare Award Recommendation link on the Review Award Recommendation page.	Compare award recommendations.

Selecting Strategic Sourcing Events for Optimization

Access the Select Event page.

Business Unit, Event ID, Event Type, Entered By, or Event Name

(Optional) Select a value for any of these fields to further narrow the search criteria.

Search

Click this button to retrieve sourcing events that meet the selection criteria.

Click Run when you have finished selecting the search criteria. The system sends all the required event and bid information and the constraints associated with the event to the optimization engine.

After the optimization process has completed, the system updates the event with the recommended results. You can review the recommendation by using the Analyze Events component (Sourcing, Maintain Events, Analyze Events).

Note. Only the event data for the active round and most current version of the event or line is used during the optimization process.

Running the Optimize Award Process

Access the Optimize Award Request page.

Business Unit

Select a single Strategic Sourcing business unit or a range of business units. All events that have a status of Posted and have ended or are in a Pending Award status will be optimized for the selected business units.

Entered By

(Optional) Select the individual to identify which events you want to optimize. Only those users that have created sourcing events are available for selection.

Event ID

Select an event that you want to optimize. Only events with a status of Pending Award or Posted and have ended are available for selection.

Select Event

Click this link to access the Select Event page.

Line Number

Select the line that you want to optimize. Leave this field blank if you want to optimize the entire event.

Based On

Select a value to indicate on what basis you want the bid to be analyzed using all event constraints:

Cost: If you are optimizing an entire event, then the optimization engine recommends an award based on the cost for each line of the event. If you are optimizing a specific line, then only the costs associated with that line will be used. Optimization will recommend an award based on the lowest cost.

Price: If you are optimizing an entire event, then the optimization engine recommends an award based on the price for each line of the event. If you are optimizing a specific line, then only the price associated with that specific line will be used. Optimization will recommend an award based on the lowest price.

Score: If you are optimizing an entire event, then the optimization engine recommends an award based on the score for each line of the event. If you are optimizing a specific line, then only the score associated with that specific line will be used. Optimization will recommend an award based on the highest score.

Reviewing Award Recommendations

Access the Review Award Recommendation page.

Award Recommendation Results

Name and Description	Enter the name and (optional) description of the optimization results.
Analytic Inst (analytic instance)	Display-only system generated field that identifies the process instance.
Total Award Cost	Display-only field that indicates the total award amount of the optimization instance.
Optimization Based On	Display-only field indicates the basis used for optimization instance. Value comes from the Optimize Award Request page.
Bidder Name	The name of the bidder selected for the award.
Bid ID	The bid ID selected for the award.
Total Awarded Price	Click a price link to view the individual line items that are included in this total for each awarded bidder.
Event Constraint Limit	This field indicates whether one or more constraints affected the award for the bidder. The values are Yes or No. For example, if a constraint was associated to the event that limited the amount of the award to bidders that had a low credit score, the field would display Yes if the bidder would have been awarded more if the constraint did not exist. Click the Yes link to view the specific constraints that affected the award.
	Click this button to accept the recommendation without making any changes. After you click this button, the recommended award quantities will be populated on the Analyze Total and Analyze Line pages for each of the bidders. Navigate to the Award Details page so that you can post the awards.
View Recommendation	Select a specific optimization run you wish to view.

Viewing Award Recommendations by Line

Access the Award Recommendation Results page.

Click this button to accept each award recommendation for each line. Use this option if you do not intend to accept the entire event award recommendation.

Reviewing the Award Constraint Summary

Access the Review Award Constraint Summary page.

View the constraints associated with the sourcing event and for each line.

Sourcing Objective	This display-only field indicates if the sourcing objective has a Target or a Mandatory goal. The optimization engine will first try to meet all mandatory constraints before attempting to meet target objectives.
Progress to Date	Displays the progress to date for the award.
Recommendation Result	Displays the result of the award recommendation as it applies to the specific event.
	Click this button to calculate the costs for each line. When you click this button, the optimization engine is re-run without the selected constraint to determine the cost. The difference in the award price with the constraint versus without the constraint is the cost of the constraint.
Cost of Constraint	After you click the Calculate button, the system populates this field to display the costs of each line.

Comparing Award Recommendations

Access the Compare Award Recommendation page.

Step 1. Select the Recommendations to compare.

Select	Select the check box for each recommendation that you want to compare. You may compare up to four different award recommendations at one time.
Recommendation Name	User-defined values available for selection depend upon the name of the optimization results.

Step 2. Select whether to compare the entire event or line within the event.

Line Number

(Optional) Select a specific line number to be used in the comparison. Leave this field blank if you want to compare the optimization results for the entire event.

Note. You can compare one line at a time or the entire event.

Click this button to compare the optimization results.

Click this button to accept the award recommendation for the selected recommendation.

Business Unit, Event ID, Event Type, Entered By, or Event Name	(Optional) Select a value for any of these fields to further narrow the search criteria.
Search	Click this button to retrieve sourcing events that meet the selection criteria.

Business Unit	Select a single Strategic Sourcing business unit or a range of business units. All events that have a status of Posted and have ended or are in a Pending Award status will be optimized for the selected business units.
Entered By	(Optional) Select the individual to identify which events you want to optimize. Only those users that have created sourcing events are available for selection.
Event ID	Select an event that you want to optimize. Only events with a status of Pending Award or Posted and have ended are available for selection.
Select Event	Click this link to access the Select Event page.
Line Number	Select the line that you want to optimize. Leave this field blank if you want to optimize the entire event.
Based On	Select a value to indicate on what basis you want the bid to be analyzed using all event constraints: Cost: If you are optimizing an entire event, then the optimization engine recommends an award based on the cost for each line of the event. If you are optimizing a specific line, then only the costs associated with that line will be used. Optimization will recommend an award based on the lowest cost. Price: If you are optimizing an entire event, then the optimization engine recommends an award based on the price for each line of the event. If you are optimizing a specific line, then only the price associated with that specific line will be used. Optimization will recommend an award based on the lowest price. Score: If you are optimizing an entire event, then the optimization engine recommends an award based on the score for each line of the event. If you are optimizing a specific line, then only the score associated with that specific line will be used. Optimization will recommend an award based on the highest score.