Advanced Supplier Management Lessons: Data, Data and Data
This post is based (in part) on material contained within the following Spend Matters Compass series paper: Beyond One-Off Initiatives and a Virtual Vendor Master – Advanced Use Cases for Supplier Management.
One of the most important lessons that companies often learn (too late) when deploying a supplier management automation toolset is the importance of understanding data silos and internal processes first – before even thinking about technology. Moreover, there’s no point in paying consultants to discover them for you – on what is all too often a one-off basis. Part of legwork that comes from finding, documenting and understanding availability data can help drive the type of buy-in that makes change management about change and not beating yourself bloody against internal resistance.
We strongly believe that companies should take the time to prioritize locating and overcoming data silos as a first step in any type of supplier management program, whether it’s focused on AP-based onboarding and vendor management, supply risk management, supplier diversity, supplier development or materials compliance/conformance (e.g., conflict minerals, REACH/ROHS, other hazardous substances).
As our research suggests, take the time to do this right – SIM and MDM (master data management) go hand in hand. These initiatives take around 3 to 5 years to roll out in larger organizations. They are strategic in nature and even if a tactical activity (such as Dodd-Frank compliance) is what triggers the investment, this approach will remain more or less in perpetuity. As part of this effort, put on a technical cap and investigate how the solution approach you ultimately take can “write back” to the underlying systems.
If you fix data quality and data access for those carrying out supplier-focused initiatives, fix it in the source systems as well (through a new quality-focused front end). Close the loop and correct the root cause of the mess – don’t let it block this process. As an example, you will undoubtedly find that at least 10% of your vendor records are duplicates – and that maybe half the supplier addresses floating around are not USPS or mail compliant.
This analysis is based (in part) on material contained within the following Spend Matters Compass series paper: Beyond One-Off Initiatives and a Virtual Vendor Master – Advanced Use Cases for Supplier Management. Registered users in the Spend Matters can download it free of charge in the Spend Matters research library.