Felipe Manterola: "It is impressive how in Latin America most of the bidding processes are rigged".

When Felipe Manterola was general manager of the Chilean Salmon Industry Association, he realised that none of the 20 large producers in the area negotiated with more than 25% of the approximately 2,000 suppliers that existed for the market. The remaining 75% remained unexplored, without participating in the competition process, generating lost opportunities not only for these suppliers, but also for the companies.

"Finally, there were three big pains: transparency, competition and bureaucracy in the process," says Materola.

Así, en 2016 el ejecutivo junto a Juan Carlos Hurtado fundaron Wherex, la plataforma de procesos de compra y licitaciones industriales a través de inteligencia artificial, en la ciudad sureña de Chile, Puerto Varas. Cinco años más tarde, la startup trabaja con el 80% de los proveedores de la industria de los salmones, pero también está presente en todas las otras verticales del mercado.

"Regardless of the industry, the pains, the suppliers and the needs are the same," says Manterola. "An agricultural company in Osorno, a beverage bottling company in the central zone or a fishing company in the north all buy the same category of inputs and services and benefit from all the suppliers in this network. In addition, suppliers can access all this new demand," he adds.

La compañía también arribó a nuevos mercados internacionales. En diciembre de 2020, Wherex inició su plan de internacionalización al ingresar a Perú, en mayo pasado debutó en México y ahora en junio sumó la entrada a Colombia. El fundador afirma que las industrias de estos países se enfrentan con los mismos desafíos antes mencionados, pero también tienen un atractivo de tener grupos económicos regionales y comparten culturas empresariales, por lo que les entrega una oportunidad de acceder y expandir la red industrial más allá de las fronteras.

Actualmente, Wherex cuenta con 20.000 proveedores en sus plataformas y, durante el año pasado, se han concretado más de 120.000 procesos de licitación. Manterola dice que tiene planeado transar US$ 800 millones durante 2021 y US$ 1.000 millones para 2022.

Inefficiencies in tendering

In discussions of inefficiencies in tendering processes, the imaginary leads directly to news of controversies and corruption among public authorities. But Felipe Manterola says the situation is the same in the private sector. "It is impressive to see how in Latin America most of the tender processes are rigged, the details are not known and they are not monitored," he says.

The main reasons for the lack of efficiency in procurement processes identified by the founder are threefold: excessive discretion of the decision-maker, little or no traceability within the company and an extensive budget, as can be the case in purchasing across the entire value chain of a company, which can ultimately generate perverse incentives.

WherEX has been able to measure these market failures, which have very concrete consequences. For example, the protocol recommends that a company should make at least three quotations before choosing a supplier, but, on average, a company quotes 2.2 bidders for each requirement due to lack of time or poor management. Through the platform, companies have access to 5.8 supplier offers, almost tripling access. According to Manterola, each additional bidder means a 1% savings opportunity for the company.

On the other hand, lack of transparency in processes, such as lack of information or non-transparent behaviour, generates up to 15% of value loss. Moreover, in some industries, companies waste 10% of their budgets by not generating technical validations to their suppliers. In other words, if these producers were open to the market, they would come up with cheaper offers, something they currently do not do because they do not technically validate them.

Finally, supplier concentration - contracting the same old suppliers - also generates inefficiencies in the management of tenders. According to Manterola, for every 10% decrease in concentration, the cost for companies decreases by 1%. In addition, incumbent suppliers reduce their price by 10% when they are challenged from a position of comfort to a position of competition.

De esta manera, los productores –quienes pagan una suscripción por acceder a la plataforma, que es decreciente según uso– no solo acceden al sistema de inteligencia artificial que realiza el match perfecto entre sus necesidades y la oferta disponible entre los proveedores inscritos en la plataforma, sino que también agregan información de sus proveedores históricos a Wherex. De esta manera, la startup puede aumentar la red comercial.

The company's algorithms also allow producers to detect red flags that detect behavioural deviations. For example, if a company awarded more than the average amount or assigned the supplier that was in the most expensive 10%, it is a behaviour that cannot be explained. The alert system is then activated and the process is reviewed or rectified.

"Therefore, these red flags appear that indicate the possible presence of either malicious behaviour or simply mismanagement. What is left on the table may have to do with transparency problems, very tight deadlines because operations are not planned, or because I always buy from the same supplier," says Manterola. "Then multiple sources start to appear to generate value," he adds.

Respecto a la pregunta de si tienen planes de expandirse al sector público, el ejecutivo afirma que está dentro de los planes, siempre y cuando esté acompañado por normas por parte de las autoridades para garantizar buenas prácticas en el proceso. Además, agrega que todavía el sector industrial representa una gigante oportunidad para Wherex, ya que el 94% de este segmento aún no adopta ninguna tecnología para las licitaciones.

On the other side of the mirror

Los otros grandes beneficiados de la plataforma son los mismos proveedores. Estos ingresan de forma gratuita a Wherex y pueden acceder a toda la demanda. Pero más allá de las oportunidades económicas, Felipe Manterola destaca la información que los proveedores pueden tener a través de los algoritmos de inteligencia artificial.

"The world of the industrial supplier is quite blind. For example, in business to consumer (B2C) there are agencies that give information about their positioning, price, exposure or turnover compared to their competitors," says Manterola.

In this way, companies that log on to the platform also gain access to information such as buyer behaviour, seasonality, how they are rated on quality and timeliness against their competitors, how their sales forces are performing, in which category they are most competitive, what the size of demand is for each category, and more. In this way, these companies can become more competitive, improve vendor management, their commercial posture, quality, service and timeliness.

The startup charges suppliers 0.8% of the total sale once a tender is awarded. For example, compared to a marketplace platform, this is a fairly low commission, as in e-commerce this number varies between 10% to 20%, which means that for the supplier it is a quick and easy accession.

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