This post is based on a recent Spend Matters Perspective: Sourcing, Contract Management, and Supplier Management Cloud -- Business Users Benefit From Savings Enablement. You can download the full research report for free via the previous link (registration required).
Procurement organizations -- not to mention the rest of the business -- often achieve significant savings and cost avoidance from deploying supplier management technology to create greater efficiency around on-boarding processes and continuous validation of supplier-provided information, reducing costs of managing supplier diversity programs and greatly enhancing the ability to manage and mitigate against a range of supply risk related elements. While it is often possible to build a business case for supplier management purely on cost avoidance savings (e.g., time and effort required to collect supplier registration details and to maintain the currency of this information), organizations typically consider a range of other factors (including the ability to implement working capital management strategies in an expedient manner) as key contributors to the supplier management value equation.
To justify the need to prioritize integration over other functional requirements such as advanced optimization, procurement organizations may stand to benefit the most from prioritizing integration in supplier management. In supplier management, organizations that leverage a common system and portal for supplier registration, data validation and enrichment and continuous profile management can transform procurement's achievements within the business. AP users gain benefits from automated data gathering (e.g. contact details, banking information, certs) and even validation (where needed) that enable new discounting and working capital management programs or in enlisting third-party enrichment to drive sourcing strategy, supplier implementation and overall program compliance (e.g., supplier financials, TIN, OFAC, parent-child, diversity, commodities, historic track record) -- it is clear that integration should be at the forefront of all supplier management initiatives.
Integration is often the unsung hero of successful and broad-based supplier management deployments. Without question, procurement organizations should prioritize process, data, functional and related integration and enablement as key business requirements when considering supplier management applications. The business benefits from tighter enablement, integration and linkages are significant and a lack of integration focus will hinder procurement organizations by perpetuating data silos, continuing the need of re-keying data, enabling data gaps and errors, reducing reporting functionality, and requiring a longer time to analyze content. If your IT department does not have the resources to make supplier management integration a priority for your organization, then it's essential to identify the right solution partners to work with -- including software providers and consultancies focused on driving integration success.