A Growing Focus on ‘Know thy Supplier’

Charlotte Sutton
Charlotte Sutton,
Be honest – do you really have the breadth, depth and quality of supplier information you need to do all the things you need to do?
Maybe you do for a few key suppliers, but do you have that kind of information for all your suppliers? We are having more and more organisations telling us they realise they don’t.

That realisation may be triggered by a change in ERP systems, the merger of two organisations, a supplier rationalisation mandate, the desire to beef up sourcing activity to increase supplier competition, or a severe supplier performance failure that makes the organisation suddenly aware that they have no idea what supplier risk may be out there. No matter what the triggering event, as procurement organisations move through the Spend Control journey, they are recognising that one of the fundamental requirements for success is to have a solid, sustained handle on their supplier base. They are realising that supplier information is the lifeblood of Procurement.

Procurement leaders want to know… Who are our active suppliers? Do we have all of the right information about them? Are they properly qualified against risk factors? How much do we spend with each? How are they performing? What does AP know about them that Procurement doesn’t?

It’s simply not possible to direct the organisation to buy from the right suppliers if Procurement doesn’t have a handle on who the right suppliers are. And it’s simply not possible to perform effective sourcing (strategic OR tactical), contract management, or supplier performance management without this fundamental information AND without supplier management processes in place to keep this fundamental information accurate and up to date. Even raising a non-contract PO with a non-qualified supplier can be risky.

PROACTIS is seeing that an increasing number of organisations recognise the need to cleanse and enrich their existing supplier records, properly qualify active suppliers and sometimes recruit additional suppliers before they can move further into Spend Control. After seeing this a number of times, we have now oriented our service offerings to quickly and efficiently address the full ‘start & sustain’ process – usually a clean-up effort combined with deployment of the SRM methods and controls that will enable them to keep their newly-cleansed supplier information in good shape. It’s helping a number of our customers accelerate their Spend Control efforts.

By the way… a related trend we see coming down the road is for organisations to move toward making Procurement responsible for all supplier-facing functions, including invoice processing (though we accept that getting Procurement into the realm of AP may still be a little ‘out there’ for many organisations).

To find out more, download 'Procurement Automation: Key Trends & Hot Topics'