Ardent Partners research consistently finds that suppliers will remain a top focus for Chief Procurement Officers (CPOs) and their procurement organizations over the next three years. This makes sense since globalization has and will continue to change the construct and demographics of the average enterprise’s supply base at a fairly rapid pace; it is no longer a given that the highest valued suppliers in the market will share the same time zones, languages, and/or business customs with their customers. For buying organizations, this means that how they communicate, collaborate, and transact with their suppliers and the enabling tools and platforms that they utilize to manage their supplier relationships will take on increasing importance to business operations in the years ahead.
Despite the current CPO focus and the growing importance of supplier relationships today, only a small percentage of procurement departments surveyed year after year have made the required technology investments and begun to achieve basic visibility in several of the key areas that enable successful supplier management: supplier information management (SIM), supplier performance management (SPM), and supply risk management (SRM). Today’s article, the second of two articles on supplier management processes and technologies, will examine SIM as a process and the value of automated SIM solutions to the procurement organization.
Supplier Information Management
Supplier information, which includes important business and regulatory information like locations, categories, certifications, and licenses, underlies all of the enterprise functions that touch a supplier. This information is critical in the on-boarding, development, and overall management of suppliers. It is fair to say that effective supplier relationship management cannot be established without having detailed, accurate, and accessible supplier information in the first place. But the ability to capture key supplier data and establish a single enterprise-level repository that functions as a “source of truth” for all supplier information can be a significant challenge for the typical procurement department, which tends to have sizable process gaps across its operations and often, several distinct systems used to manage supplier-based processes. These gaps leave teams with costly and ineffective processes and tools that make it all but impossible to manage this data holistically.
Supplier information management systems, like those provided by Simetryk, automate the capture, validation, and maintenance of the critical supplier information that supports strong supplier relationships. The solutions help improve the quality, accuracy, and timeliness of the data by (1) enabling suppliers to maintain their own information in the system (with proper internal verification) (2) enabling data validation with third-party sources (3) propagating the information to all key systems like eSourcing, eProcurement, ePayables, Contracts, the ERP “vendor master,” other back-end systems, and any regulatory or compliance tracking systems. The more advanced SIM solutions provide heavy analytical capabilities to help process and evaluate the supplier data to make smarter, more informed decisions. In a clear recognition of this issue, 37% of all procurement organizations report that they now deploy an automated SIM solution, while another 43% have identified these gaps as issues and state that they intend to invest in a SIM solution within the next 24 months.
Final Thoughts
Combined, these should be heartening figures. However, current figures indicate that only a little more than a third of sourcing and procurement organizations today deploy an automated supplier information management solution, leaving much opportunity for technology investment and expansion, but in the meantime, exposing these organizations to the kinds of operational, performance, and risk issues that can sour procurement and enterprise performance.
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