Supplier Management in 2016: Onboarding, Risk Management, Development and More

supplier management

Supplier management is a catch-all description for a set of activities and technologies that are often carried out in silos across an organization. From accounts payable-centric onboarding (also known as enablement) of new suppliers to risk management activities with a supply chain focus, to strategic development centered on joint cost takeout and innovation led by cross functional procurement and non-procurement teams, supplier management has grown to encompass a wide range of initiatives and numerous individuals both within and outside the organization.

Technology is both the glue and the bridge that brings it all together, not to mention also automating the collection, management and analysis of vendor information. Given how much of a nexus supplier management is to procurement activities today, we’re excited to feature it at the ISM and Spend Matters Global Procurement Technology Summit taking place in Baltimore from March 12–14.

We can’t do justice to all of the trends shaping supplier management initiatives and technology adoption in 2016. But here are just a few:

  • Increased priority — Across industries, supply chain risk management and supplier risk management will continue to remain a priority, with the adoption of a wide range of enabling solutions and content to support these initiatives and general growth outpacing other procurement technology market sectors (based on our forecasts). But in manufacturing in particular, given the decline in oil prices and commodities, more advanced procurement organizations will make further investments in predictive risk analysis given questions of supplier financial stability within certain categories at multiple tiers in the supply chain, primarily involving raw or semi-finished materials, as well as logistics.
  • Clean supplier master data — This will increasingly be seen as critical to support a wide range of procurement initiatives, including purchase-to-pay activities. This will result in an increased emphasis not just on sourcing- and category-centric “clean up” via spend classification to support events and cost reduction initiatives but also the broader creation of supplier master data that includes appended fields needed to support different activities. However, emerging approaches to spend classification and cleanup will also apply to these broader datasets.
  • A supplier network or more? — Onboarding and enablement will start to become seen as a specialty area with vendors bringing specific solutions to market, potentially decoupled from functional product areas, such as e-procurement. Enablement will include supplier connectivity and next generation approaches to electronic data interchange (EDI) and basic document exchange. Watch this space closely.
  • P2P and finance leading — Accounts payable-centric onboarding initiatives will increasingly be tied to purchase to pay (P2P), e-invoicing and trade financing activities. Accounts payable automation activities centered on gathering supplier data for basic automation, workflow, scan and capture, and more will be seen as less valuable than functional enablement.
  • Supplier diversity remains detached — We unfortunately see supplier diversity (in North America) being an activity that is treated as a silo, without tight integration into broader supplier management and sourcing programs. In other words, expect more of the same — which is a shame on many levels given how much diversity programs can achieve with surprisingly tiny budgets, including multi-tier visibility and tracking.

There’s more to supplier management activities (and technologies) than meets the eye, and these observations are just scratching the surface. Join us at the ISM and Spend Matters Global Procurement Technology Summit for a deeper dive on how supplier management technology is changing procurement.

Voices (4)

  1. Scott Harris:

    I’ve worked on several presentations to try to effectively communicate the variety in how organizations look at Supplier Management. From Supplier Information Management, to Risk management, to Master Data Management tools, there is so much cross-over and and so many grey lines. I am also seeing a big increase in priority recently for all aspects – especially in the last couple years.

    Clean data, and hands off information and updates is definitely a trending concern, and I also am seeing both AP and procurement as stakeholders, with AP leading to try to get electronic payment info and make sure payments and accounting are compliant. Diversity is definitely important, but to select organizations only. Reading between the lines, many companies simply are not communicating this as a top concern. For the ones it matters to though, it is critical.

  2. Scott Harris:

    I’ve worked on several presentations to try to effectively communicate the variety in how organizations look at Supplier Management. From Supplier Information Management, to Risk management, to Master Data Management tools… there is so much cross-over and and so many grey lines. I am also seeing a big increase in priority recently for all aspects – especially in the last couple years.

    Clean data, and hands off information and updates is definitely a trending concern, and I also am seeing both AP and procurement as stakeholders, with AP leading to try to get electronic payment info and make sure payments and accounting are compliant.

    Diversity is definitely important, but to select organizations only. Reading between the lines, many companies simply are not communicating this as a top concern. For the ones it matters to though, it is critical.

  3. Nicholas Martin:

    Great article Jason.

    There are an overwhelming number of factors to consider in supplier management.

    It’s clear that there is a excellent opportunity for technology to help with these issues.

    I am sure the Summit in March will be extremely useful in making sense of it all.

  4. Norman Katz:

    Certainly central to a solid supplier relationship management or a supplier risk management program is a well-defined and functioning supply chain vendor compliance program. The technologies and procedures defined in a vendor compliance program – and the resultant transactions – feed the defined metrics, key performance indicators and resultant scorecards used to judge vendor performance. While not just being able to manage the vendor relationship through the analysis of the vendor’s performance, the vendor compliance program provides the ability to analyze vendor risk through the same results albeit by reviewing the data through a different analytic perspective. Similarly fraud can also be detected and reduced, whether perpetrated internally or externally or a mix of both. The vendor compliance program sits at the core in its use of supply chain technologies (enterprise resource planning systems, electronic business-to-business, automatic identification systems) and operational procedures in defining the relationship between the customer/buyer and vendor/supplier/seller trading partners. While not the only answer, it is an integral piece to the puzzle.

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