Scanning the World for Reliable Suppliers, Panjiva Seeks to Bring Order to a Messy Process

If you’re in an industry where you depend on suppliers from across the globe, searching the Web for a part or a collaborator isn’t exactly as easy as trying to figure out where you should eat dinner. Josh Green discovered this around 2005 when he was a Harvard Business School student interning at E Ink, the maker of the screen behind Amazon’s Kindle, and needed to find a supplier for an electronic component.

It wasn’t easy. So he started talking to MIT computer science student Jim Psota, who he had already been working with on putting together a startup. In 2006 they incorporated Panjiva, a Web company that aims to simplify the supplier search process for businesses of all sizes. Their product is out to tell manufacturers and retailers everything from who they can order parts from, to whether or not a potential supplier is stable enough to work with, to what their top competitors are shipping.

“We’ve built a Google-like product, but we’re organizing information specific to the global trading space,” says Psota, the co-founder and chief technology officer, who I spoke with at the company’s Cambridge, MA, headquarters (CEO Green leads the operations in New York).

Panjiva (a play on the name of the supercontinent Pangea) is based on a system of data mining algorithms, machine learning, and natural language processing that culls numbers from more than 10 sources, like U.S. Customs. After Green and Psota found their initial inspiration for the business, they spent a few years developing the product, and raising angel and venture financing. Its backers include Battery Ventures and angels like eBay veteran and Stanford professor Michael Dearing, fashion designer Diane von Furstenberg, and David Frankel of the Founder Collective, Psota says. Panjiva’s Web-based, industry-comprehensive search tool launched in April 2009. Home Depot was its first customer.

The core of the Panjiva product is its search engine, where users can find suppliers by searching for parts, or get more information on a particular supplier they have come across by searching their name. Panjiva’s database has more than 1.5 million companies (including suppliers and customers) from more than 190 countries. Its interface is made to allow users to sift through that deep set of data to find a short list of potential partners. Panjiva customers use drilldown menus based on variables such as country, certifications, shipping date, or the health of the supplier’s business.

“The raw data that we get in is very messy, it provides disparate data points that are not that interesting in and of themselves to helping the user,” explains Psota. “The secret sauce is taking the disparate and messy data sources and boiling them down and cleaning them up.”

Once users get a manageable list of suppliers they could potentially purchase from, they can select a particular company to view a complex profile, which includes information such as suppliers’ past shipping statistics, contact information, and graphs of their trends in shipments, customers, and key products. Panjiva doesn’t go any further in terms of connecting users to suppliers or setting up transactions, but allows them to make their own decisions based on the data provided.

“We’re doing the heavy lifting in the back end,” Psota says of how his company makes sense of the data for users.

The Panjiva search also enables users to browse the names of customers who have shipped a particular product. This can be used as a competitive intelligence tool, to figure out which competitors have shipped which products and when. The system also has an alert function that can notify users via e-mail when a competitor has started using the same supplier that they do. This is particularly useful for customers who are dealing with suppliers in nations where intellectual property laws aren’t as stringent as the U.S., and where a common supplier among competitors could potentially put their product information at risk, Psota says

Psota says the founding team initially thought the search tool would be most useful for small and medium operations, but big-time retailers and businesses, like Home Depot and Panjiva’s 10-plus Fortune 500 customers, have adopted the service to manage their fleet of existing suppliers. Its alert system can notify users when a new supplier for a particular part has emerged or if an existing supplier has accrued a red flag. This makes a lot of sense given how immensely complicated global supply chains can be, and how costly it can be for companies who suffer delays. Ask Boeing about how it has tried to keep all its suppliers on schedule to produce its composite-material airplane.

Panjiva’s interface also has a collaborative component, where users across a company can leave notes on a certain profile to indicate to their colleagues if they think that supplier is worthwhile, adding another way for customers to make sense of the vast amount of data the system holds, Psota says.

The 10-person startup offers trial subscriptions to its Web service for as cheap as $99 a month. A typical subscription runs around $4,000 a year for one user, or $10,000 a year for a subscription for an unlimited number of users at a company. “We’re trying to just get a ton of users on the system and make it a no-brainer,” Psota says.

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