A vision for Supplier Management 2.0

 (We're delighted to finally have a guest post from Declan Kearney of 360° Supplier View, a true guru of Supplier Management theory and practice).

I had the pleasure of presenting a keynote, on behalf of the Chartered Institute of Purchasing and Supply (CIPS), on the theme of ‘Supplier Management – a holistic approach’ at e-World in London recently. I took the ‘holistic’ part literally and covered a lot of ground from industry case studies to Information Management, Risk Management all the way through to Supplier Relationship & Innovation Management and Enterprise Collaboration. The following is a summary of the key points:

  1. Supplier Management is probably one of the most mis-represented, under-resourced yet critical areas of business. The responsibility of managing suppliers has typically resided too narrowly within procurement or supply chain while the term itself has been mis-represented within silos of Strategic Sourcing, Performance Management, Spend Management, Relationship Management etc. When you consider the material commercial impact of supplier-related events and activities, you must consider every element (Information, Sourcing, Contract, Risk/ Compliance, CSR/ Sustainability, Spend Analysis, Relationship, Performance & Innovation Management, P2P, Social Enterprise Collaboration) within your overall strategy.
  2. Before investing in technology, it is imperative to define an enterprise strategy with corresponding governance and processes and to assign appropriately skilled resources. It is no use addressing individual supplier-related requirements on behalf of one function or business unit while parallel or related challenges are being addressed by other parts of the business – a good example being ‘supplier governance’ that could reside with Enterprise Risk Management or procurement/ supply chain.
  3. The terminology used by technology and service providers is not helping the development of the market from the perspectives of both corporate best practice and technology provider development. The sooner the market standardises on the definitions of elements such as Supplier Information Management, Supplier Relationship Management (‘SRM’), Enterprise Collaboration etc. – the sooner companies will increase their investment and solution providers will scale.
  4. The areas of Information, Risk, Compliance, CSR/ Sustainability, Relationship Management, Enterprise Collaboration and Supply Analytics represent emerging areas where the most progressive companies will continue to improve their competitiveness and optimize their supply chain investment.
  5. The technology landscape is evolving – many ‘niche’ providers have struggled to build scale and run the risk of expanding their propositions too broadly and hence losing the compelling value of their propositions.
  6. Supply Chain Finance, e-invoicing and Dynamic Discounting are also emerging areas that need to be aligned with core Supplier Management activities. Investment in SRM will be negatively impacted if the financial management of suppliers is impacting on supplier cashflow positions.
  7. Best practice Supplier Management requires a commercial, cross-functional approach that addresses the challenges of internal and external stakeholders, including of course your suppliers.
  8. As with many functions, the discipline of Supplier Management will evolve from an application-centric to a data-centric environment as more intelligence-enabled methods emerge.

I was delighted with the feedback on what I have proposed as Supplier Management 2.0 – mapping each element of Supplier Management to an incremental value curve over time. Risk & Compliance, CSR/ Sustainability, Relationship Management, Information & Communications and Supply Analytics are all positioned as horizontal elements as they apply across the complete lifecycle.

Interestingly, aside from positive procurement reaction, a number of the more passionate responses to the presentation came from senior finance attendees – I have consistently believed that, while procurement clearly plays a role, without an entirely ‘joined-up’ strategy between a number of what I term ‘supplier-facing’ functions (e.g. Operations, Finance, Procurement/ Supply Chain, QA, IT, Engineering), Supplier Management investment will not realise its ultimate potential return.

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