Understand Your Suppliers – Or Else!  

We have several brand new briefing papers to launch in the early part of this year.

Today, we’re delighted to bring you a paper sponsored by software firm HICX and written by erstwhile Spend Matters UK/Europe MD Peter Smith. You may remember our breakfast briefing with the firm last year which looked at AI and procurement, and there is a linkage here with this paper, which is titled, “Understand Your Suppliers – Do You Know What's Happening Below the Surface?  What You Really Need to Know and Why”. 

The link comes from the fact that to make AI work well in procurement, we are going to need really good, robust, up-to-date and accurate data and information about our suppliers. Most organisations do not have that at the moment, we would suggest, although an increasing number are at least understanding just how important it is. Knowing about and understanding our suppliers well (not just the largest either, as we will discuss later) is becoming more and more important for a whole host of reasons, not just from an AI perspective.

So, in this paper we look at three key types of supplier information: that related to “basic” business needs, performance information (usually gained from active suppliers during a contract) and risk-related information. At the centre of the discussion is a look at how the regulatory and compliance burden has increased in recent years in terms of organisations needing to understand much more about their suppliers and supply chain.

Issues such as modern slavery, GDPR and conflict minerals, as well as industry-specific demands such as those in financial services, have put a real focus on the need to manage appropriate information about suppliers. The implications and penalties in terms of fines, other government actions and reputational damage can be severe if organisations don’t get this right, as we have seen in a number of recent cases.

The final section of the paper then looks at how organisations can segment their supply base for the purpose of considering these risks. Interestingly, it is certainly not just the “most strategic” suppliers, those at the top of our SRM pyramid, that can be a source of issues in some of these regulated areas.

So, managing suppliers well requires the right systems, policies and processes for data management. We don’t discuss in detail in this briefing how to achieve that, but we do hope to highlight some of the key issues and draw your attention to what is an important issue.

You can download the paper here, free on registration, and we will be back with some extracts form it in the near future.

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