In the digital age, organizations as a whole and procurement departments in particular swim in data. It is everywhere, spread across an alphabet soup of internal and external systems – some connected, some not; some refined, some not; some structured, some not. It wasn’t always this way. Twenty-five years ago, the procurement function was manual, paper-based, and transaction-oriented. “Data” was but a character on Star Trek: The Next Generation. All of that has changed in the past 15 years, following the dot.com bubble and the wave of digitization, connectivity, and automation that has swept over the world. Now, “Big Data” permeates and drives the digital world, and it will only get more intense from here.
There is a Big Data “crisis” sweeping organizations and procurement teams today. But with the right people, processes, technologies, and ultimately the right attitude, this “crisis” can be an opportunity for Chief Procurement Officers (CPOs) and their teams to transform operations and deliver more value to the enterprise. Technologies exist today that allow procurement to not only manage Big Data up and down the source-to-settle value chain, but also leverage it for greater value.
This series explores further each of the eight sub processes of the source-to-settle process to illustrate just how Big Data can be managed and leveraged to make procurement’s life easier and extract the most value out of the data residing inside and outside of the enterprise. Next up, supplier information management.
What is Supplier Information, and Where is it Located?
Supplier information is an all-encompassing term that captures the structured and unstructured data related to a given supplier – points of contact (POCs), payment information, sourcing and contractual documents, and performance and risk assessments. Casting such a wide net across the enterprise pulls in a lot of supplier information that other source-to-settle solutions already manage and leverage. For example, spend analytics, eSourcing tools, and business/supplier networks serve as de facto supplier information hubs, although that is not their intended purpose. The same can be said for contract repositories, supplier performance management, supply risk management, and accounts payable tools.
Suffice it to say that supplier information is everywhere across the enterprise, residing in more than a half a dozen disparate systems managed by three or more departments – accounts payable/finance, legal, and procurement/supply management. These are conservative estimates, too, since there can be many other stakeholders within the source-to-settle process – HR, IT, Marketing, Operations, Product Development, Product Lifecycle Management, and Sales readily come to mind. Realistically, 10 or more enterprise departments can “own” some version of a supplier’s information, and it raises questions about how accurately and effectively they can manage the data and information if it remains siloed.
Why Does it Matter?
Since 2016 is an election year, the saying, “everyone is entitled to their own opinions – not their own facts” is as apropos in managing supplier information as it is in debating political issues. Since this is not a political blog (Editor’s note: we’ll leave that to the likes of Nate Silver and his blog, FiveThirtyEight), the implications for AP/finance, legal, and procurement, not to mention seven or more other departments within the organization, having their own version of the same supplier information are far and wide.
For one thing, the information can be incomplete based in large part on the fact that not all departments need the same information. AP/finance primarily needs a supplier’s financial information (banks, account numbers, etc.); legal primarily needs a supplier’s legal information (contracts, opposing counsel POCs); and procurement needs a whole host of supplier information (historical spend, sourcing and negotiation documents, contracts, performance evaluations, risk profiles, and so on).
Another thing, the information can be inaccurate, out-of-date, contradictory, or repetitive, since it comes from different silos outside of the organization from a supplier that may not be on the same page with itself. With at least three and upwards of 10 organizations across a typical mid-sized organization receiving information from a given supplier, it creates an environment ripe for confusion. Imagine a scenario in which
- Procurement conducts a sourcing event with an onboarded supplier, but the supplier’s POC information is two years old and they have since left the supplier;
- Legal references an earlier and long-since expired contract;
- AP remits payment to an old or incorrect bank account.
Each of these scenarios can be rectified “the old fashioned way” by picking up the phone and getting the right information, perhaps after being bounced around a bit, but that can be a costly and inefficient way to get on the same page with the supplier. And it does not solve the wider problem of the enterprise not being on the same page with its supplier data. The problems are compounded for enterprises that have hundreds, thousands, and tens of thousands of suppliers that they contract with. “The old fashion way” may work in one-off cases, but it cannot scale. There has to be a better way to manage supplier information across the enterprise.
How can Source-to-Settle Solutions Manage and Leverage it?
Fortunately for enterprises in general and procurement teams in particular, there are supplier information management (SIM) tools available in the market today that centralize, standardize/homogenize, and govern supplier information from across the enterprise. They are essentially data hubs for supplier information that offer users a single source of supplier “truth” across the enterprise. They automatically pull supplier information from places like AP/Finance, legal, procurement/supply management hubs and centralize them into one location where they are automatically categorized, cleansed, and enriched.
Data managers can govern the management process and edit or override fields that are incorrectly populated, helping to alleviate the problem of having “too many cooks in the kitchen.” These systems are by necessity digital, and are often cloud-based and mobile-friendly, which facilitate instant access from any connected device and enables the free flow of information when and where it is needed. Systems like Microsoft CRM, Salesforce, and Sharepoint are familiar examples of SIM tools; but many supply management solution providers offer dedicated solutions, either as a best-of-breed tool or as part of a solution suite, that serve as procurement’s answer to the growing problem of managing the information of multiple suppliers across the enterprise.
With potentially many departments collecting, maintaining, and accessing their own form of supplier information and few or none operating on the same page as the other, the potential for miscommunication, mismanagement, missed payments, and other missed opportunities grows exponentially with the number of suppliers that the enterprise works with. Small companies may be able to absorb the confusion and sort it out; but mid-sized and large organizations simply cannot scale their resources for hundreds or thousands of suppliers. Fortunately, SIM tools can help these organizations automate, centralize, homogenize, and govern the management of supplier information and provide the scale they need.