Spend Matters Perspective – Research Download
Developing and Maintaining Accurate Supplier Data: Lessons from Personal Hygiene to Overcome Dirty Supplier Information in Finance and Procurement
and Thomas Kase, Lead Analyst, Spend Matters
If you need accurate vendor data to deliver value to your organization — regardless of what data point that is — then this Spend Matters Perspective is for you.
Today, many finance, operations and procurement organizations have directed sourcing and supply chain activities toward finding the right product at the right price delivered at the right time — while overlooking the impact of less tangible vendor issues, or even merely assuming that these will be dealt with by someone else in the organization. Undoubtedly, spend analysis and aggregation of vendors across business units, managing parent-child links, etc., is important. But such activities only solve a small fraction of the overall data quality mess.
This Spend Matters Perspective is focused on the less tangible vendor data — data that is normally collected and managed by many different business areas in any given company. With this sort of data, companies often find themselves with many challenges, even beginning to assess the inefficiencies and errors from duplication of effort and use of outdated information. Others are blissfully aloof with functional silos, unaware of the existence of such data in the first place. Yet as we all know, anything managed by more than two parties is bound to develop redundancies (aka duplicates) and, if not from the beginning, quickly become filled with errors. So we’d like to take a look at some other ways bad vendor data can cause you grief in both finance and procurement.
Our analysis sets up the business case for investing in programs the right way to drive vendor data quality based on a real-world metaphor we can all understand. And in doing so, it highlights corporate costs associated with bad vendor data impacting supply chain users in procurement, finance, accounts payable, supplier diversity, legal and other position. We also provide examples of immediate hard savings from eliminating overpayments, duplicate payments, missed rebates and discounts. The paper also makes the subject real by offering numerous, real-life examples of specific and quantifiable cost sources of potential savings and related cost avoidance/reduction opportunities plus an actual case study from a leading pharmaceutical firm.
Perhaps most important, this Spend Matters Perspective also introduces ways to turn bad data into quality data — particularly through the use of technology. In learning from this analysis, readers will walk away with concrete steps about how best to eliminate bad vendor data and how strategically important such steps are to broad corporate initiatives outside traditional vendor management. In the paper, we also explain how learning to fix data can be a means to self-fund other supplier management initiatives (supplier diversity, supply risk, supplier performance, etc.)