Case study: How industry mergers required an energy firm to begin its supplier management transformation

When should companies consider acquiring the latest procurement technology?

It seems like a simple question, but many businesses don’t always get to spend time considering the latest solutions, like in the area of supplier management — they’re more often compelled to do it when the market changes through a merger or acquisition, when their old technology and manual processes don’t cut it anymore, or when their suppliers and competitors outpace them by digitally transforming.

NRG Energy — a power company that produces, sells and delivers electricity and related products and services across the United States — faces all of these forces in the dynamic energy industry, which is in a constant state of consolidation, competition and digital transformation. In that climate, acquired companies must integrate their computer systems, but the trick isn’t just merging two companies — it’s how do you integrate all of the new firm’s vast number of suppliers in a way that enables enterprise governance to reduce risk, manage compliance and provide data insights.

To learn more about when and how to start your digital transformation and continue to ensure it works for your business, we talked with NRG Energy about the evolution of its supplier management technology.

Q&A

Spend Matters: When thinking of mergers and integrating new companies, it seems like it would be a nightmare to onboard and track all of the new suppliers and keep this information clean and up to date. How does NRG Energy address that with a technology solution?

NRG Energy: It makes it so much easier having a supplier-facing enterprise technology solution that mirrors our enterprise processes and workflows, enabling all departments to proactively govern our suppliers.

We face constant change in the energy industry, which is always dealing with M&A and transformation. So, if we acquire a new firm, onboarding their suppliers needs to go smoothly.

We use the AdaptOne Supplier Management Portal — which coincidentally we got from our merger with GenOn. Moreover, GenOn adopted the AdaptOne solution when it acquired Mirant.

Our supplier onboarding challenges were easily overcome because of AdaptOne’s adaptability (pardon the pun). With each merger and acquisition, there were things we wanted to keep and things we wanted to change with respect to supplier management and onboarding. With AdaptOne, it was easy because they could implement our new requirements within weeks, while at the same time, the AdaptOne framework had the flexibility to support historical information so we didn’t have to lose our supplier history.

AdaptOne’s agility was exemplified when they implemented an entirely new supplier questionnaire to help us manage risk more effectively and a new onboarding workflow in less than 10 weeks. This capability was unlike anything we’ve seen from other IT suppliers before. We were impressed with their professionalism, efficiency and quality of work.

AdaptOne’s flexibility was “word” when they were able to keep versions of the old questionnaires from Mirant and GenOn. In addition, we were able to maintain the same instance of the solution like it was an in-place upgrade. The old versions of the questionnaires gave us the ability to keep all historical information about our suppliers and alleviated our concerns of losing data as a result of the data conversion and migration. That’s what we call a customer-driven solution.

Is it important to have a collaborative relationship with your technology provider?

It is of the utmost importance. More often than not, organizations like ours have specific processes and nuances to how we do things that are unique to us. The universal solution that many solution providers offer doesn’t cut the mustard for us. On one hand, organizations must be able to communicate the specific ways we do things to our tech providers. On the other hand, the tech provider must offer solutions based on their capabilities. Together, we can all agree on the best approach and solution.

Our experience in collaborating with AdaptOne has been stellar. We found ourselves consulting with AdaptOne for other things besides supplier management. They have provided invaluable experience, expertise and solid advice to us.

Was it important to have the flexibility to implement a supplier management solution that worked the way NRG Energy manages their supplier processes?

It is very important for us to have the ability to easily adapt to new or changing requirements to efficiently support our organization.

Does your supplier management solution enable your organization to successfully manage supplier risk and compliance?

Yes, we are able to manage compliance and supplier risk in real time.

How was the transition from manually managing your suppliers to a creating a self-service supplier portal that connects the onboarding of suppliers with NRG Energy’s supplier enterprise processes?

For us, it was a total paradigm shift. Before AdaptOne, we were managing our supplier information using a tool that was maintained by internal users. We paid a third party annually perform data cleansing for us. The issue with this approach was that the information would become outdated quickly, and we had to rely on outdated data until our next data cleansing exercise because we lacked data accountability across our organization.

AdaptOne provided us a supplier onboarding and vendor master solution that eliminated our need for annual data cleansing and brought enterprise accountability of our supplier data.

In addition, they totally changed our mindset on how to manage supplier data. With their innovative approach, everyone is responsible for the supplier data. Suppliers were responsible for maintaining their profile. Buyers were responsible for agreements and general requirements such as insurance. Accounting was responsible for payment and remittance information. Supply chain management was responsible for health, safety and environmental data.

We were even able to support our IT Security team’s staff by collecting and managing information security assessments and certificates. The biggest benefit with this approach was that because all stakeholders are involved in the supplier information management process, the organization trusted and used the data. Trusted data is more valuable to an organization than just data alone.

Was there an “a-ha” moment when NRG Energy realized the solution was working well and the enterprise’s adoption of this technology was exceeding expectations?

There were several “a-ha” moments. The first was when NRG first acquired GenOn, and with the acquisition, the AdaptOne Supplier Management Portal. When NRG chose to use AdaptOne’s solution over Ariba. And after only 10 weeks, AdaptOne successfully implemented the new NRG-specific supplier onboarding solution. It became clear that we made the right decision. NRG was impressed at the speed and quality that AdaptOne delivered a totally new supplier questionnaire, a new onboarding and qualification process, and continued to support the historical data and questionnaires from GenOn.

Another memorable moment was when NRG wanted to implement an IT Security questionnaire for our IT service providers. One of our IT Security associates asked if AdaptOne would be able to implement an IT Security questionnaire and review process. I don’t remember who said it, but their response was: “Has AdaptOne ever told us they could not do something?”

Not long after that, AdaptOne implemented an online IT Security questionnaire with a workflow that integrated with our supplier onboarding process. As a result, we were able to obtain important security practices for our suppliers and collect PCI DSS certifications. Again, we achieved our goal to mitigate information security risks and ensure that our IT service providers are certified and maintain their certification.

One of the unique qualities of AdaptOne is that they are not only solution providers, but they are also trusted consultant partners. They have been doing this for many years, and they don’t just do what we ask them, they communicate with us when something is not such a great idea and offer alternative approaches to achieving our objective. We don’t always know the best way to solve our own problems, and AdaptOne helps guide us to a solution.

How does the supplier management portal’s ease of use affect adoption by suppliers and internal users?

A supplier-facing portal is essential to a successful supplier management program. Ease of use is extremely important and critical to supplier adoption because it ensures that the supplier submits complete and accurate information. Otherwise, the process goes back and forth between the supplier and the reviewers, which takes more time and effort.

Internally, the supplier review and qualification process must also be intuitive. The best processes will be event-driven and will route the information to the appropriate personnel for review using emails and reports. This removes an unnecessary burden on your personnel so that they only need to do something if it is needed. One of the goals of the supplier should be to make your organizational users’ jobs easier by creating a trusted single source of truth for supplier information and to keep that information up to date.

You mentioned that AdaptOne has an ongoing role in your supplier management and digital evolution.

How important is it to have a vendor master that you trust when you’re trying to add advanced features for digital transformation, like spend analytics, e-sourcing, contract lifecycle management, etc.?

A trusted vendor master is crucial in business. You gain trust in your vendor master when you know that you are collecting all the pertinent information from your suppliers, and that the proper people in your organization are reviewing, qualifying and using the supplier information. This requires effective processes, policies and technology solutions. Spend analytics may not provide the desired insight if you haven’t collected all the pertinent information about your suppliers, such as product and service categories, diversity designation, company size, etc. E-sourcing opportunities may not reach all potential suppliers if their sourcing contacts are outdated.

We continue to partner with AdaptOne to ensure that our supplier management challenges are being addressed. We share our pain points and issues, and AdaptOne collaborates with us to determine the root cause, if a solution is needed, and what the best options are for resolving our challenges. Keep in mind, the solution is not always technical. Sometimes the solution is procedural or a policy change. Regardless of what the solution is, you need a trusted adviser that has the knowledge and experience to guide you.

What advice do you have for others who are starting this process?

It’s all about the data — accurate data is the heart of effective supplier management. Take a holistic approach to supplier management. An affective vendor master solution is a fundamental component of a successful organization, and the solution is only effective if everyone in the organization and its suppliers play a role in maintaining it.

The supplier information and the business process for reviewing, qualifying and managing the supplier are equally important. A vendor master that is not properly maintained through a process of vetting and qualification becomes untrusted data and imposes a risk. A vendor master that doesn’t collect all the needed information and is not supplier-facing is insufficient and must be supplemented with other solutions. Therefore, the best supplier management and vendor master approach is the combination of data and a holistic enterprise process.

Choose a solution that has the flexibility and agility to adapt to your changing needs. Organizations are unique in how they run their business. We realized this when we acquired Mirant, and subsequently, GenOn. On both occasions, we updated the information we collected from our suppliers, and adopted a new process for onboarding and qualifying our suppliers.

Moreover, choose a solution that can be flexible and can adapt to changing business conditions. If there is one constant in business it is change. From simple changes like adopting new payment methods for suppliers, to more complex ones such as organizational structure changes, your supplier management solution should be able to adapt with your business in a cost-effective and timely manner.

This Brand Studio post was written with AdaptOne.