Doing their bidding

On a visit to CombineNet, Sen. Rick Santorum witnessed the wizardry the IT company offers customers looking for better and faster ways to purchase everything from commodities to transportation services.

Santorum quickly grasped the implications the company’s solution could have for government procurement, including defense contracting, homeland security and prescription drug plans.

While Santorum acknowledges that legislators generally view advanced technologies “from 30,000 feet,” the impact that CombineNet’s technology could have on complex government purchasing matters might bring it into much closer view in Washington.

CombineNet applies “combinatorial science,” says Tony Bonidy, the company’s president, to analyze purchasing problems and come up with solutions. Unlike reverse auctions, where bid specifications are narrowly drawn for bidders, CombineNet’s software solution allows clients to offer bidders “competitive expressiveness,” says Toumas Sandholm, CombineNet’s founder, chairman and chief technology officer.

That feature, which makes it possible for bidders to craft a bid that works efficiently for them and for a purchaser to look at hundreds or even thousands of scenarios, says Bonidy, offers more opportunities for savings.

CombineNet’s approach is to give bidders some running room to allow them to create the best deal for the client by selecting among a variety of options to deliver the specified product or service. The client can look at various scenarios and decide which is most cost-effective.

Bonidy points out a case where PPG wanted to purchase pigments made by only a handful of manufacturers, an instance where it would appear that there would be little opportunity to save. The ability for bidders to select among the options for filling the bid order that would suit them and allow them to deliver the lowest price possible saved PPG millions on a single buy.

CombineNet’s challenge isn’t finding customers, says Bonidy. Bayer Corp, PPG, Heinz and other Fortune 500 companies are finding value in the Strip District’s technology and opening doors to others.

Rather, Bonidy says, it’s a matter of deciding where to put efforts to grow the company and producing products that can be sold off the shelf to customers rather than creating customized solutions for every client, which the 53-employee company has done since its 2000 launch.

For now, its efforts are being directed toward the upper third of the Fortune 500, organizations that engage in large and complex purchasing events.

The key for these companies, says Bonidy, is not to beat down suppliers on price.

Says Bonidy: “The companies that are going to succeed are the ones that can extend their bricks and mortar and embrace their supply base.” How to reach: CombineNet,