First-Person Experience: Pulling Together a Supplier Relationship Program

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Spend Matters welcomes this guest post from Anthony Ryan, head of procurement operations at eir.

We have a pretty excellent P2P system at eir. It’s in the cloud, easy to use and delivers one of our primary objectives as a procurement team: spend under management. Our CPA has given the procurement department the task of recommending ways to deliver on her vision of an supplier relationship management program, complete with a contract lifecycle management program.

Our study of how best to address the needs of the SRM and CLM programs led us to consider the pros and cons of best-of-breed point solutions versus fully integrated end-to-end solutions that service all things procurement. Budget constraints always come to bear on these studies. Other criteria important to us include the following:

  • Must be a SaaS option
  • Ease of use
  • Licensing options for casual or occasional users and stakeholders; regular business users; and power users
  • Simple integration options (at a minimum ERP, feeds to and from P2P)
  • Easy-to-use reporting and dashboards

Our colleagues and expert connections consistently boiled things down for us in terms of asking us to identify the pain points and required functionality to address issues. Quality of data and visibility in easily consumable formats is how I distilled the feedback on supplier management. A category manager should be able to access a supplier record and know everything about that account. How many contracts are active and how many are expired? How many open POs are there? Can they be viewed by value and commodity, historical spend, quality index scores, certifications, QBR dates, on time performance, sourcing event participation, saving opportunities identified, etc.? Can you get all that in an easy consumable way on a single dashboard? Some vendors we interviewed are very close to the target here.

Vendor management should be extensible in ways that allow you to plan events or reminders at a task level. This facilitates milestones that might arise from an SOW, periodic recertification of quality standards, CSR standards, QBRs, etc. Integrations will be required to feed spend history, on time performance and so forth.

With respect to planning and orchestrating sourcing events, the tools should be template-driven and sequenced in a logical manner. The user interface for both the organizer and the supplier must be simple, intuitive and easy to interact with. Analysing the responses should include a quality score derived from what we might already know about the supplier, weighted scoring on our questionnaires, scoring on price, with an option to add in computed values driven from custom fields or settings as might be needed. Graphical representation should happen in the tool and be available to send to interested stakeholders.

Awarding a contract on the back of a sourcing event should automatically interface with a contract authoring tool. The contracting tool should be template-driven. Redlining should allow for discrete data points to be captured in the underlying contract record. A change in payment terms or termination notice days in the redlining process should automatically update the contract record. The negotiators should have access to a playbook with pre-approved clause swap options from legal and clause swap options that would trigger a prescribed approval process. Version control and audit history are expected. The more advanced tools have the ability to track the turnaround time at each step. Procurement is often blamed for the length of time it takes to get a contract approved and signed with a vendor, when in fact they are the facilitators pushing it through the system.

Not a lot of vendors do a good job of tracking contracts through a lifecycle that includes date tracking for amendments, auto renewals, renewals with conditions, terminations, extensions and so on. The CPO wants to see at a glance how many contracts are in negotiation by category manager (workload management); how many contracts were renewed in the month or the last quarter; savings delivered by contract by category manager by commodity; and where the bottlenecks are when trying to get approvals. These dashboards should exist in a good tool as these are universal questions.

There are stakeholders who need to know where a contract is in the negotiation or periodically review or audit contracts. There are stakeholders who may want to read the T&Cs of an in-effect agreement before engaging a supplier on related business. These users are not in the system every day. Their access should not cost the same as a power user or a negotiator.

Contract management is all about process and flow. Approvals must be configurable by the administrator. Approvals should be available for the contract record, for any particular clause, for any discrete data point, for updates to templates, for updates to the playbook and more. E-signatures for approvals and signing events should be built in. Status updates should be automatic during the lifecycle (in authoring, out for signature, fully signed, in effect, expired, in amendment, amended, renewed, terminated, etc.).

We have done thorough reviews with vendors that sell point solutions to address these needs as well as vendors that purport to have a full end-to-end solution. Our selection process has us about to go into final presentations with two vendors. One specializes in what they are calling “up stream” processes (SRM, Sourcing and CLM) and integrates neatly with our existing P2P solution. The other is an all singing, all dancing solution that appears to do an excellent job of addressing all our needs.

As I have not been able to uncover any significant shortcomings in either offering, I suspect the final decision will be driven primarily on price. Roadmap is important to me. I will be leaning towards one of these vendors who is already talking about machine learning and future AI enhancements. The decision always rests with the budget holder. We just try our best to influence in a way that we think is best for the company.

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