Supplier Management Fundamentals — Managing the Vendor Funnel

In a recent Spend Matters Compass report, Supplier Information Management Technology Fundamentals -- Part Two (available for free download), we explore the concept of the vendor funnel in detail (a colloquial term, we know, but stay with us for a moment). Just as sales processes are typically managed, with prospect/customer engagements are tied to a funnel metaphor -- with larger inputs at the top, and smaller subsets cascading down and coming out at the bottom -- so can supplier management processes also be handled.

Spend Matters experience suggests that open registration supplier solutions can ideally operate as a multi-dimensional funnel where incumbents, internally invited prospects, and cold-calls (aka walk-ins) coexist in the same supplier information management (SIM) toolset -- a solution that typically serves as the starting point for (or fully comprises) eSourcing, contract management, SPM, compliance, etc.

Within this typical vendor funnel approach, stages and steps may encompass a range of statuses and system flags linked to specific processes and workflows (e.g., validate supplier submitted information for a tax ID is correct). A typical selection of funnel stages/steps for suppliers at different elements -- or for suppliers that have been flagged for one reason or another -- of engagement might include:

  1. Incomplete (cold call or walk-in that hasn't completed registration)
  2. Invited (by internal user, but has yet to complete registration -- more actively monitored than #1)
  3. Registered (registration complete, but has yet to pass internal review)
  4. Active (mandatory compliance areas are completed -- cleared to participate in RFPs)
  5. Onboarded (fully vetted, A/P steps met, approved for locations, categories etc.)
  6. Red-flagged (an active vendor with open compliance tickets -- can be used but needs other steps prior to activities)
  7. Prohibited (based on non-compliance of some sort)
  8. Incumbent (open contracts)
  9. Diverse (small, women, minority-owned)

Vendors can have many flags/statuses at the same time. A good SIM platform will manage requirements and data points dynamically as vendors move between stages and come under the scope of more or fewer requirements. If you're curious to learn more, check out Supplier Information Management Technology Fundamentals -- Part Two.

- Jason Busch and <a href=- Thomas Kase

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