IBM, Partners Launch Supplier Connection — Diversity Lip Service or Something More? (Part 3)

If you're curious about learning the basics of Supplier Connection -- as well as our argument about why I think the site could very well be an exercise in contradictory futility -- you can turn to Part 1 and Part 2 of this post. In this final installment, I'll don an optimist hat and suggest some things that would make Supplier Connection attractive to large Fortune 500 buying organizations. Without further ado, let's quickly dig into the list of five procurement value-focused recommendations:

First, Supplier Connection would be a huge boon to procurement if it included more than just self-nominated supplier profile information and requested registration details. If it could validate and provide real-time data from qualified third-party sources about TIN look-ups, diversity status, risk ratings (based on a combination of D&B, Equifax or related information in tandem with news feeds, social network-derived information such as hiring/layoffs as judged via Linked-in trends, etc.) and related information, I could see this being a highly used tool. Moreover, if procurement did not have to pay to look-up/confirm diversity, risk and other information on other suppliers not in the system, they'd also be more likely to use it.

Secondly, Supplier Connection should provide a low-cost or free means of exchanging procurement transactional data between buyers and suppliers. This move would also make the eco-types at the IBM foundation excited by potentially reducing huge amounts of paper and mail. Supplier Connection could enable this by hooking directly into Ariba, SAP, Oracle and other large company purchasing systems and would provide a means to circumvent larger and larger network fees being charged to suppliers.

Third, Supplier Connection would be valuable if it truly established a standard or supplier registration/profile information details across all large companies (a handful is not enough). Much as small and large, elite and non-elite universities are taking the Common Application for prospective students, Supplier Connection could function in very much the same way. This could also lead to a standardized metaphorical SAT/ACT qualification test (e.g., online ISO or other quality surveys) that would do wonders for fueling supplier quality and development initiatives today.

Fourth, Supplier Connection would also be a highly useful tool for procurement teams (not to mention suppliers) if it provided multi-tier capability for managing registration and supplier diversity initiatives. It's downright silly that every large Fortune 500 company tracks supplier diversity separately (not that I'm in favor of the government doing it for them). I could see a scenario where Supplier Connection becomes not only a registration tool for diverse suppliers, but also a means to encourage lower tier suppliers to "shop" off the menu that OEMs make available to them -- and to in-turn track diversity down two or even three tiers.

Fifth (and finally), Supplier Connection could deliver significant value if it becomes a shared way of pooling supplier quality and performance information (both qualitative and systems) amongst participants in an aggregate manner. This would encourage procurement organizations to make better total cost decisions in the first place without handicapping smaller suppliers by rewarding those organizations -- regardless of size -- that perform at or above expectations.

Regardless of these five suggestions, I remain skeptical that Supplier Connect will be welcomed by procurement organizations that will quickly realize the contradictory irony of balancing the requests of diversity teams to participate with their own supplier reduction/rationalization programs. Moreover, I also believe that many procurement teams view their supplier management process -- or at least parts of it -- as a strategic advantage. But what do I know?

Perhaps over six years writing this site -- and a decade of interviewing, analyzing and working closely with procurement organizations -- has made me too much of a curmudgeon to treat such a well-intentioned initiative with the soft-hands it deserves. Enough from me. What do you think?

If you want to learn more about how the right platform can help you manage a range of supplier/vendor management initiatives (e.g., diversity, risk, performance, etc.), please download our latest free Spend Matters Compass research on the subject: Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR

Jason Busch

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