My friend Declan Kearney recently wrote a post for the Procurement Leaders blog, a post that is really a distilled manifesto arguing for a certain role for supplier management in companies. While he put this in a relatively short blog post (see above), the concepts he outlines are quite significant indeed and call for a new role of supplier management that is really outside the bounds of procurement alone. When it comes to technology, Declan argues that we need a new approach.
Here’s his take on the topic (note, this is written by someone who previously ran a supplier management tech company):
“The role of technology is recognised as fundamental to delivery of real competitive advantage. ERP vendor data has been cleansed and categorised to a common company-wide classification system. New vendor approvals and vendor data set-up and administrative controls are tightly managed with clear segregation of duties. Supplier records are identified by a common corporate identification system and mapped by corporate linkage to enable consolidation and spend leverage. The transactional focus of ‘ERP/vendor data’ is recognised as only one element of what has been defined as ’supplier information’. ERP systems are therefore complemented by best of breed systems across all components listed above.”
“Data analytics capabilities enable the three fundamentals of descriptive (the ’as is’), predictive (the ’what may happen’) and prescriptive (the ’what will we do when this occurs?’) analytics. To ensure that analytics are leveraged for key decisions, staff are ‘analytically literate’ in line with corporate objectives.”
“The technology environment is fully aligned with directly related corporate initiatives and supporting systems such as governance, risk and compliance – for example, supplier governance is not treated as a silo of GRC or enterprise risk management in isolation of supplier risk management strategy.”
Declan also argues for the role of higher-level analytics in the form of supplier management dashboards. A lot of what Declan proposes we at Spend Matters would agree with. But our belief is that from a systems perspective, the world of supplier management is no longer just driven by internal requirements. It’s driven by partners, including banks and other third parties that can provide financing options to our supply base. It’s driven by our customers, who might work with us in a multi-tier buy/sell type program that extends to our suppliers. And it’s driven by the market, which is defining its own set of requirements and expectations for corporate social responsibility (CSR) and other practices.
I can’t help but feel that in 2014, any view of supplier management that is “systems driven” alone is flawed. Even SaaS / cloud-based tools won’t necessarily cut it. The future of supplier management will be based just as much on technologies and systems that sit between organizations in a next generation platform model that takes what we’ve learned about supplier management so far and extends it into multiple supply chain tiers while bridging general procurement requirements with governance risk and compliance (GRC) and other needs.
While Declan and I might disagree slightly on technology’s future in this area – I think the network vision is the one that will ultimately triumph – reading between his lines, I think we’re more in alignment on something even more controversial. To wit, to do true supplier management – or supplier relationship management – we’ll need a new function. Procurement alone will never be up to the task – or even have the incentive to focus on the area in the way it needs.
If you’re curious about the topic of supplier management, I would encourage you to check out our research on this topic (contact us for a one-time trial if you’re not already a Spend Matters PRO subscriber). Here are some of the research brief titles we’ve published in recent quarters: