Supplier networks have dramatically altered the way procurement handles supplier data. The ERP system, long the home of any company’s supplier master data, is ceding dominance to new technologies. Emerging sourcing and procure-to-pay (P2P) solutions now offer compelling alternatives to old processes and systems, and procurement organizations are looking to supplier networks both to enhance collaboration with suppliers and to serve as the central repository for data related to business partners.
Supplier networks have helped improve organizations’ P2P processes, particularly in e-invoicing. These networks are also convenient for suppliers, provided onboarding is done properly.
In this three-part series, we examine e-invoicing practices in Latin America, beginning with the basics of onboarding. The next two installments cover unique compliance requirements for organizations operating in Latin America and how to evaluate supplier readiness in the region.
Defining the Basics of Onboarding
Supplier onboarding is basically the process of inviting, registering and bringing all supplier´s required information into the supplier network to fully enable suppliers to start doing business with the buying organization (from registration process to gathering all required information). This can potentially increase the supplier's business too by allowing them to interact with more buyers. The registration process varies between buying organizations and networks. Gaining access to the network’s features could be as simple as a filling out a form with a name and an email or as complex as filling out detailed questionnaires, uploading documentation and certifications and receiving special training for the network’s features.
Processes for Onboarding Suppliers
As previously mentioned, the purpose of onboarding suppliers is to enable suppliers to interact with and conduct business with buying organizations, either for sourcing or P2P processes.
In sourcing, organizations can also onboard their own suppliers. However, having the capability to reach new suppliers to compare their proposals against current suppliers is an added value. Sourcing is always empowered by competition, even if suppliers are yet unknown. For this reason, access to a supplier network with thousands or millions of onboarded suppliers is a golden opportunity for a sourcing process.
In P2P, buying organizations onboard their current supplier base to start interacting with the suppliers to obtain all of the benefits of the supplier network, including features such as process automation and collaboration.
The challenge for supplier networks in Latin America involves onboarding local suppliers. Latin American countries require supplier networks to host open supplier registration efforts, combined with network openness policies that mandate buying organizations share suppliers amongst themselves and let all network suppliers be visible to others. This requires that outside (global) network providers rethink many of the core elements of their business models, approaches and offerings that have been successful elsewhere in the world.
Supplier networks play an important role by supporting the automation and simplification of the process, including the collaboration between buyers and suppliers, the exchange of documents, acknowledgments, approval workflows, document visibility and status, and the upload of a supplier´s financial and organizational information. However, none of the above could be done without onboarding and enabling suppliers into the supplier network.
When a supplier is onboarded, both suppliers and customers (buying organizations) can take full advantage of all of the network´s technological and services capabilities to support their sourcing, e-procurement, e-invoicing and payment processes, such as:
- Fully automated processes: document exchange (purchase orders and invoices), approval workflows, document modifications, disputes
- Simplified interactions between buyers and suppliers: sharing documentation, receipt acknowledgements, advance shipping notice, documents status visibility
- Value-add services: sales/buying opportunities, financing options, benchmarks, analytics, invoicing managed services, supplier information services including risks
- Compliance for Latin America e-invoicing regulations, which is mandatory in more than 10 countries
- Product and services catalogs management: upload, add, change and delete items and services, automated approval workflows, status visibility
The following are some common challenges in onboarding, for suppliers:
- Sometimes entry to these networks comes only via an invitation from a buying organization. Although networks are supposed to include open registration, many portals are not necessarily readily available or accessible without a link provided by the buying organization.
- It’s often too expensive for suppliers to maintain several onboarded networks. Unfortunately, network openness, while still a hot topic, needs time to mature. Suppliers need to get onboarded in all of the networks and portals in which their customers do business.
- Some suppliers lack the IT resources or capabilities necessary to get onboarded and transact through the network. In this scenario, buying organization should provide managed services to support suppliers.
- Too much required information to start the onboarding process, although this could be done in phases until the supplier has a commercial relationship with the buying organization, where more information is needed
- Learning curve: suppliers require training to get onboarded to use the network
- Lack of support to comply with all legal and commercial regulations and requirements (e.g., for e-invoicing) in the Latin American countries in which suppliers do business
The following are some common LATAM challenges for suppliers’ networks:
- Low Latin America supplier participation in global networks
- Lack of value add-services from networks for Latin American suppliers (e.g., benchmarks, financing options, mailroom, managed services, analytics, new sales opportunities)
- Creating an open and free invitation process to onboard suppliers with an easy and quick registration process, until a real commercial relationship starts and buyers require more detailed information
- Supporting suppliers to be in compliance with government regulations (fiscal, legal and commercial) in order to do business in each Latin American country
- Supporting a supplier’s lack of IT maturity, such as accepting all types of documents and communications and transforming them into documents accepted by the buyer and country
- Providing training alternatives
- Simplifying supplier activities/tasks required to do business with buying organizations
The challenges will always have their solutions, even when not everybody sees them the same way. At this point, there are several technological solutions that have invested their time and money in building capabilities to turn these challenges into competitive advantages, and yet there is still a ways to go to achieve one IT solution that can overcome all the challenges mentioned above.
Stay tuned for the next two installments in this series: “Compliance and What it Means in Latin America” and “Supplier Readiness and E-Invoicing in Latin-America.”