How Quickly Does Supplier Information Go Stale – A Litmus Test

When it comes to supplier information, arguably the most important factor to take into consideration is not just what to collect, but how long it will be of use in the initial format in which one gathers it. Indeed, perhaps as important as what to collect is the realization of how quickly data goes stale. Initial enablement is important, of course, but data needs to be refreshed over time to stay current. Facilities close. Employees leave. Banks change. Insurance policies lapse.

The typical litmus test we use when we ask procurement and A/P departments to determine how comprehensive their supplier enablement and supplier management data processes are is simple: If you had to notify all of you non-card suppliers of a change in payment terms, how many vendors could you verify communication of the term change within 30 days? The answer is often abysmally low based on the data quality contained within their systems – even if they have invested in e-procurement and e-invoicing already. Most have gone through a one-time onboarding process vs. making supplier enablement and master data management a key enabling business process.

Note, the payment extension test concept is not original (someone told it to us years ago). But the “pass rate” for it when asked in a typical procurement or A/P audience has barely nudged itself forward in the past decade, even as our systems and capabilities have evolved to manage supplier information and drive enablement processes.

Poor supplier systems data is the root cause of so many procurement and finance technology ills ranging from a failure to achieve expected ROIs from e-procurement systems to missed programs goals for e-invoicing and trade financing initiatives. But you can take action by complementing P2P and other investments with specific efforts around supplier enablement.

Ask yourself: Could you pass the test? If not, do something about it!

This post was based in part on content in the Spend Matters Perspective, Supplier Enablement for Invoice Discounting and Supply Chain Finance: Background, Tips, and Secrets for Success. In this research brief, Jason Busch and David Gustin explore the history and future of supplier enablement, centering not only on P2P processes, but also onboarding for trade financing (e.g., supply chain finance, invoice discounting, etc.) initiatives.

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