Coupa acquires Llamasoft for supply chain agility

Integrating supply chain planning

Llamasoft's AI-based supply chain planning software will help Coupa's customers optimize their organizational spending, both indirect, which includes products used in organizational operations, and direct, which includes goods that are used to manufacture products, according to Donna Wilczek, senior vice president of product strategy at Coupa.

Donna Wilczek

"In our conversations with our customers, it became apparent that if we could connect the supply chain design planning and design processes with Coupa's spend processes, we could create a more effective level of business spend," Wilczek said.

Llamasoft's supply chain planning capabilities enable companies to create models that show how the supply chain will react under different conditions, she explained, and this planning can be integrated into Coupa's spending execution processes.

"A decision coming out of Llamasoft can now come into Coupa for execution into a spend transaction like a sourcing event or contract," Wilczek said. "For example, [in Coupa's] treasury management solution, a treasurer could have real-time visibility of a supply chain decision and the impact it will have on the treasurer's forecast."

If certain conditions change, companies can plug those in and see how they might affect things down the road, she added.

This planning capability integrated with spending execution processes is even more vital now that the COVID-19 pandemic has disrupted supply chains; Llamasoft's tools are suited for solving complex "what-if" scenarios, according to Wilczek.

"If there's anything that has become readily apparent to everyone now, it's that supply chains need to be able to be flexible and constantly adapt to the changes that are hitting them, while proactively managing the risks," she said. "When you look at all of these factors and you're constantly trying to model all of these components into your supply chain, it's clear that people can't just do these things with Excel spreadsheets."

Helping to achieve better supply chain agility

The acquisition was a bit surprising, but is an excellent one for Coupa, according to analyst Mickey North Rizza, IDC program vice president of enterprise applications and digital commerce. It should enable the company to provide organizations the ability to achieve better supply chain agility and visibility.

Mickey North Rizza

"The acquisition closes the gap for procurement and finance teams and the C-suite to now have total spend visibility into indirect, direct and services, and have critical visibility to the cash and outlay impact immediately as supply chain decisions are made," North Rizza said. "The ability to connect procurement decisions with supply chain design and overall strategy means a more integrated planning capability and moves companies a step closer to resiliency and optimization."

The move could also help Coupa secure a better market position, she said.

"Coupa will definitely gain a stronger foothold into the G2000 since a large portion of Llamasoft's clients are in the top tier," North Rizza said. "In addition, Llamasoft's deep domain expertise means Coupa will now gain a strong foothold into many traditionally ERP, manufacturing and supply chain accounts, opening up the door to more clients."

Llamasoft is by far the best strategic network design and optimization vendor.

Predrag Jakovljevic, principal industry analyst at Technology Evaluation Centers in Montreal, also found the acquisition surprising but said it made sense because a significant amount of most companies' spend is in supply chain and manufacturing.

Predrag Jakovljevic

"If you combine spend management with supply chain network design, you suddenly have the tools to optimize, simulate and manage a huge part of the operations," Jakovljevic said. "Llamasoft has awesome AI and ML capabilities. And if Coupa has tremendous amounts of data, which it should in its Open Business Network, that could be really interesting."

This is increasingly important as companies need to find ways to improve supply chain agility, he said.

"[COVID-19] has shown the importance of diversifying supply chains and being able to do what-if scenarios for sourcing important materials," Jakovljevic said. "Llamasoft is by far the best strategic network design and optimization vendor."