All too often, we believe companies don't put enough emphasis overall on supplier management aside from pet initiatives (e.g., supplier diversity) and fire drills (e.g., supply risk). The problem lies with a silo-driven mentality toward vendor management initiatives that permeates too many procurement, supply chain and finance organizations today. Fortunately, there's hope, and companies can model an idealized supplier management function based on what's possible – not just an urgent need that needed to be addressed yesterday.
Our latest Spend Matters Compass Research paper, Beyond One-Off Initiatives and a Virtual Vendor Master – Advanced Use Cases for Supplier Management tackles the advanced supplier management use cases and benefits head-on.
Unless your procurement experience comes from living on a remote island where the principal means of trade are focused on bartering goods and services, you will have come across supplier information management in some form. If you've done your homework, perhaps you have seen one of the many Spend Matters Compass research documents focused on SIM. One example is Supplier Management Compass SIM Technology Fundamentals (Part One and Part Two), and there are several others. These documents help define SIM at the enterprise level. For those who aren't familiar with the basics of SIM, these two papers can serve as a content bridge between that island and the experienced supplier management mainland.
Beyond the supplier management basics, 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. Yet before addressing these topics, it is important to consider the characteristics of the organizations that should take SIM further.
Indeed, 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 on-boarding 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.
This paper explores in significant detail advanced use cases for supplier management including those based on advanced open registration, advanced closed registration, finance, legal, and operational intersections, business process outsourcing and politics/regulation requirements. Whether you're just getting started with supplier information management and want to explore what's ultimately possible or you're looking to move a current program and implementation to the next level, we encourage you to download this advanced research paper on the topic.