Priority #1: Quickly Gain & Keep a Handle on Your Suppliers

Charlotte Sutton
Charlotte Sutton,
One of the primary requirements for effective Spend Control is a central directory of properly qualified suppliers covering all categories.
Your organisation can only be expected to buy from best value, low risk suppliers if these suppliers are available to them at purchase time.

In addition, a complete, up-to-date central supplier directory (enabled by good processes) is key to the efficiency and effectiveness of your Procurement team and for establishing strong relationships.

However, the reality is most organisations find themselves today with supplier records that are duplicated across multiple systems, incomplete and out of date.

Many of those suppliers just ‘showed up’ when someone purchased something from them, were never properly qualified to determine the relative value they deliver, nor the risk they entail, and there is often a lack of information for procurement purposes.

This puts the organisation at risk from operational disruption and indirect liability from suppliers or insufficient supplier coverage in key categories. It also causes an organisation’s cost base to be higher than necessary:
  • Cost of maintaining supplier information
  • Cost of low supplier compliance due to lack of visibility
  • Cost of not getting the best prices as your organisation is harder to do business with etc. 
In order to tackle this fundamental element of Spend Control – and many organisations are starting out here – there are a number of practical capabilities that should be considered:
  1. A central supplier directory with complete, accurate, and up-to-date supplier information that acts as the foundation for all other Spend Control activities
  2. Standardised processes for supplier recruiting, qualification, adoption, and review that will enable you to efficiently and effectively maintain the quality of your supplier directory – and actual supplier base – over time
  3. A cloud-based supplier network that will streamline supplier communication to free up Procurement time so they can focus on other value-added activities like sourcing
At the same time, organisations should consider putting in place a structured, efficient and cost-effective process to:
  • Cleanse existing supplier records – for establishing the central directory and standardising content
  • Identify and address any current risks – audit high risk element, target non-compliance
  • Build a complete view of the supplier base – analyse supplier coverage and initiate supplier rationalisation
  • Put in place ongoing supplier management processes – recruiting, qualification, adoption, and review
To learn how PROACTIS solutions can help you improve the quality of your supplier records and get a handle on your supplier base click here