Advanced Supplier Management: Building a Strong Foundation

This post is based on material contained in the following Spend Matters Compass Series brief: Beyond One-Off Initiatives and a Virtual Vendor Master – Advanced Use Cases for Supplier Management. Organizations starting on the supplier information management (SIM) basics still have much to gain from understanding how more advanced use cases can deliver a level of value that builds incrementally on more foundational deployment approaches and models.

As companies move past the closed registration threshold to open registrations and self-management with workflow and broad integration with other software investments to reuse and enable MDM throughout the enterprise, what should they expect to achieve, and what should they require from solution vendors? These questions are at the core of understanding not only what advanced supplier management can deliver, but also which technology partners to work with.

Before we dig into this, it is important to consider the characteristics of the organizations that should take SIM further. There are aspects of vendor management embedded in the daily life of most, if not all, corporate functions. Consider how most employees interact with, depend on, or influence the required performance of suppliers in some way. Supplier management is part of everyone's job description! The goal of SIM solutions is to reduce or even eliminate as much of the routine aspects of this interaction as possible and to ideally push the bulk of the remaining portion onto the suppliers to self-manage.

In terms of general supplier management maturity, companies typically progress from loading their accounts payable vendor master content into a SIM platform and then adding a few qualitative touch points that ERP systems handle especially poorly (insurance documents, W9/W8 forms, diversity certifications, etc.) to moving toward handling all vendor onboarding aspects. Throughout these processes, the control or management of who a company is doing business with is at the core of the advancing effort.

As supplier management practices become more advanced, so too does overall risk management (and theoretically risk reduction). On a broader basis, advanced supplier management ROI comes from risk reduction, improved visibility, minimized maintenance, and compressed cycle time in engaging with selected suppliers that also meet required performance criteria. Stay tuned as we investigate advanced open registration approaches as this series continues.

- Jason Busch

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