Supplier Enablement and P2P Roadblocks — Ongoing Data Quality and Maintenance

This is a post of within a broader series looking at supplier enablement and P2P roadblocks. The material is based in part on our recent research paper: A Foundational Look at P2P Technologies. The paper can be downloaded for free via the above link.

If you were to survey a typical buying organization that's gone through a procurement transformation on the quality of their sourcing process, they'd probably respond with an affirmation about how far their sourcing process has come. And chances are they'd be able to toss out a plethora of facts as well -- cost savings, cost avoidance, number of events, spend under management, etc. But if you change the question to ask about how such a transformation has impacted their supplier data quality and maintenance, I can assure you that in most cases, you'll get a blank stare. This is one of the reasons that poor supplier data quality is costing typical companies millions of dollars annually today. It's also one of the reasons why strategic sourcing -- which is largely process- and not systems data-driven -- is one of the fastest levers for typical cost reduction that an average company can pull within procurement.

Incidentally, I'll be speaking in a webinar on this exact topic later today (1-2pm Central) with Sherry DePew from Lavante called "Exploring the Dirty Secrets of Dirty Supplier Data -- Adding Up the Costs for Finance and Procurement." Click here if you'd like to register!

There are countless examples of how poor supplier data quality can directly impact a company's costs, including duplicate payments (e.g., card and ACH or ACH/ACH), credits sitting on a vendor's balance sheet that go unclaimed, contract/matching misalignment which results in overpayment for goods or services contracted originally at a lower rate, a lack of current vendor rate cards, missing or incorrect contact details, incorrect spend analysis data and wrong vendor contact details. While the examples are numerous, one thing is always clear when it comes to supplier data quality (even accurate data has a half life that is considerably shorter than many organizations think). It gets stale fast.

What is the quality of supplier data in your organization like? Here's a quick test. Answer any of these in the negative and you've got a problem that you should address as part of any P2P program. Could you:

  • Send a note to all suppliers letting them know of changes to your payment policies?
  • Attest to having a policy in place to proactively look for duplicate payment issues and trade credits?
  • Vouch for having a system to ensure data accuracy in the first place to thwart typos, transpositions and other errors in an automated manner? Such capabilities are likely to include supplier notifications and response, reminders, data validations, follow up communications, data entry, data entry corrections, approval and internal exception management.

And don't forget to register for "Exploring the Dirty Secrets of Dirty Supplier Data -- Adding Up the Costs for Finance and Procurement" today from 1-2pm Central for more on the subject.

Jason Busch

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