Friday Rant: Rising to the Multitier Challenge — Digging Into What Our Suppliers Buy (Part 3)

In the first two installments of this series (Part 1 and Part 2), I offered up some background on why and how companies can (and should) gain visibility into what we termed "micro" and "macro" supplier issues at lower-levels of the supply chain. I also suggested a few areas where companies can benefit from building visibility through changing sourcing processes to take advantage of multi-tier visibility and general opportunities. In this final post, I'll share some additional thoughts on vendors that may help manage companies overcome different stages of the multi-tier supplier visibility challenge. Perhaps as a foundation, it's critical to better understand who your multi-tier suppliers are.

A starting point for this may be your spend visibility or supplier management provider if you're already working with them on diversity enrichment data. Yet it's critical to be aware that few (if any) of the diversity programs we know of track diversity spend on the item level necessary to build multi-tier supplier visibility to enable more general supply chain and sourcing-type programs for direct and services spend.

Other options for building visibility include solutions like SAP Supplier InfoNet that provide on-request information (based on a supplier's willingness to share) as to what suppliers they are working with based on specific alerts that may occur within a supply chain at a lower-tier level. Users can still see alerts (e.g., quality degradation, financial distress, debarment) based on lower-tier information, but in order to gain access to which supplier is causing the alert, they must request it from their tier one supplier. This is based on an opt-in model with specific and often industry-specific supply chain networks and models. Organizations may wish to consider such an option, but they should also seek to gain greater control of their own multi-tier supply chain information destiny by taking this information management in-house, making the sharing of multi-tier supplier information a direct requirement of doing business with their company.

Once companies have multi-tier information available, they can more effectively manage risk and build hierarchical supply chain models as part of their supplier management/supply chain risk management modules and tools. Some companies may have done this in the past, but no doubt the information was either based on one-time data pulls and/or had significant material missing from the equation. Companies should be able to use solutions from their spend analysis and supplier management (including supplier financial risk, compliance/CSR, etc.) providers in this regard. If their current vendor cannot support such hierarchical and expandable views, they should consider an alternative or supplemental solution.

From a sourcing standpoint, companies should look for two classes of solution for driving multi-tier strategies within direct material supply chains. These include tools that can help drive demand aggregation strategies, models, sourcing activities and views. Even though they do not necessarily compete today in a head-to-head manner -- and offer a range of separate and distinct capabilities as part of their broader offerings -- vendors such as Co-Exprise, Supply Dynamics and Triple Point Technologies can all enable demand aggregation capabilities at varying levels (Supply Dynamics is probably deepest here, at least of the three mentioned).

The other class of solution is sourcing optimization, or "advanced sourcing" capabilities, as we sometimes refer to them. Here, both CombineNet and Trade Extensions come to mind first as the two strongest independent players in the market that focus on nothing else. Suite vendors such as BravoSolution, Emptoris and Iasta are also worthy of consideration.

Regardless, the important takeaway to note here is that many existing solution providers you're probably already working with -- or who you've considered working with -- are likely to be able to help in some manner in building and enabling multi-tier visibility and subsequent strategies. Ideally, start with who you know if you're satisfied in a technology vendor relationship, and expand outward from there. Just remember, whatever you do, a multi-tier effort should never be a one-time data gathering exercise. It must become a routine process and a core component of all sourcing and supplier management activities.

Jason Busch

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