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To Procurement and beyond — bridging the supplier information gap

12/09/2020 By

In many large businesses, it’s still very much the case that Procurement and Accounts Payable work separately. In fact, we could ask, do they really “talk” to each other at all? And that goes for other business units too. Why shouldn’t everything that touches sourcing, supplier, contract and risk management go beyond procurement and into the realms of other business lines? Traditionally we work in a very closed shop, but it doesn’t have to be like that. Certainly it could benefit the whole organization if it weren’t operating in silos.

Shannon Kreps, VP Product Marketing at spend management experts Medius, and buying veteran of 20 years, recalls how when once she addressed a room full of business entities in her then organization, all of AP sat together on one side of the room, Procurement on another, and so on. “It struck me just how siloed these business units really are,” she says.

“Procurement is so focused on setting things up and getting the right price, it’s easy to forget about the finance aspect, or legal, or other departments. But we really should be thinking about the whole, or holistic process that surrounds sourcing and buying. And it’s not just AP, it’s important that all operations talk to each other.”

In 2019 Medius, with its robust cloud-based AP automation solution, acquired Wax Digital, known for its sourcing and e-procurement expertise. The combined strengths of each organization means Medius can now do a good job of fixing that gap. There are three key areas where Shannon believes procurement can ford that bridge and share information to get the P2P business working as a whole: supplier management, sourcing and the underpinning risk management.

Getting the business units involved in supplier information management and onboarding

“We see supplier management consisting of three tiers,” she says, “supplier information management (including risk assessment), supplier onboarding (from registration to account maintenance) and ongoing supplier relationship management (making sure things are working out and being able to track that).”

“When we talk about bridging the gap between procurement and the lines of business, we might assume that procurement has all the knowledge about the suppliers and should be responsible for it. But it’s having the ability to set up processes, templates and strategy to allow a shift in knowledge to the business that is the real strength of procurement. True, you don’t want anyone in your organization just picking up a new supplier; they might not choose one that has long-term validity, or they might not have looked into their financial situation, or checked if they are on an international fraud register for example. But what procurement can do is set up the processes for the business to follow so that they can be involved in asking the right questions, in vetting the responses and in helping ensure risks are managed properly.”

“The Medius platform manages supplier information right from the very beginning: it ensures you can properly tier your suppliers, it takes you through the right lines of questioning (is this a high-volume low-value supplier, or a specialist supplier, or does it come from a region I should be concerned about?) and you can create a more in-depth questionnaire for suppliers. You wouldn’t expect procurement to know and vet all of those answers, but you can route the responses around the organization according to expertise, so I might have someone in Legal look at T&Cs, or someone in CSR look at how they handle child labor and so on. So we can be very intricate in the way we vet new suppliers right upfront in our platform, and involve the businesses.”

Sharing the load with ongoing supplier relationship management

One of the platform’s core strengths is its proprietary iPaaS (Integration Platform as a Service) offering, Medius Connect, which facilitates integration with support systems, giving it a unique ability to integrate with specialized external applications (like marketplaces, other supplier networks, tax engines, or intelligence providers) and internal ones (like ERP, eProcurement, AP or IMS) to strengthen the sourcing and purchasing processes.

“Once a supplier is up and running, you might want to run different types of questionnaire internally to see how they are performing, and involve the business with that,” says Shannon. “For subjective questions, like do they get back to you in time, or are they friendly to work with, you can integrate the answers back into the procurement or the ERP system and then look at the more quantifiable data, like do their POs match properly, do they have invoices that regularly go on hold, do they deliver on time, what’s the quality like? All inputs are a valuable source of information and all can be used to create a viewpoint of your supplier — and that information can be accessed and used by the business units.”

“I’ve worked for firms where supplier forms are cumbersome, and difficult to use and maintain. But a user-friendly experience for role-based approvals, means you have the ability to spread the responsibility. This is a very appealing proposition: it’s so much easier for suppliers to update their information, without the risks of email or spreadsheets, and it’s a real strength for the business that everything starts and ends in the platform – even the traffic of system messages (delivery, receipt and response) is all transparent and accounted for.”

But it’s also important not to look at the relationship in one way. “We need to ask whether our supplier is happy doing business with us, are they happy with the relationship, is there something we need to be doing to improve it? Because when you get into a position when supplies are low, as we’ve seen this year, we want to be in a strong and happy relationship with our key suppliers. It’s a mistake to think of the buyer in a position of power, because at times like these, we can be the risk. Suppliers need assurances. They need to know they’ll get paid, that they can have easy access to information like invoice status, that they can have a different way of viewing a PO or responding and collaborating. We need to be able to fulfill those needs, and that’s also where the Medius platform can help.”

A single view of the whole customer relationship

“All our modules can talk to each other, and through that we are creating a global environment. This will mean a single place for suppliers to see their details, update them, check their invoice status, and so on, in an integrated spend management portal.

“Because all information can flow through the system and allow business units to talk to each other, users will be able to pay through the same system in which suppliers are managed and sourced. Instead of approved invoices going back and forth, we are creating a whole payment platform to allow checks and electronic payments, transfers, foreign exchange and dynamic discounting to happen in one place. This will really break down the barriers between procurement and AP to bring continuity, visibility and end-to-end performance.

“This is a crucial aspect of supplier management: you can spend a lot of time setting up your supplier relationships and putting contracts in place, but at the end of the day if you don’t actually pay your suppliers on time, because you can’t get invoices and POs to match for example, you are going to harm those relationships you’ve worked so hard to put in place. This is not the time to risk that. A robust AP automation function that allows you to easily receive, approve and pay invoices will keep your supply chain going. And to enhance that relationship scenario, we are working on a multiple Medius customer view for suppliers, so they can manage all their relationships in one connected environment: an end-to-end source-to-pay process inclusive of AP automation.”

Sourcing – a strategic imperative

Of course no matter how strong the relationship, it’s a key strategic procurement exercise to maintain multiple sources of supply. And this, Shannon explains, is where you can really extend your reach beyond procurement professionals into other parts of the organization and bridge that information gap.

“If we want to run a new sourcing event, we want the lines of business involved, because some of the supplier vetting might involve specific requests, or might require local knowledge. Procurement can manage that entire process and has the knowledge of what needs to be done for different types of events, but can still easily push the approvals out to the lines of business.

“Some of our customers, because the process is set up so well, allow the businesses to run sourcing events. So instead of having to go to procurement each time, they have access to the sourcing platform. If they want new sources of supply, or they want to work with someone locally, they can run the event but have procurement involved in the final sign off. The supplier responses come in, the scoring can be automated, they have access to standard terms and conditions, contract details, and therefore the business is in control. Procurement is empowering them to work quickly and compliantly, without getting in the way. The businesses can run more events, have the ability to save more money and reduce risk. And they can set up a secondary source if the first supplier fails, which can quickly be acted upon.”

Sourcing is key because most people are still doing it through spreadsheets today — it’s cumbersome, there are issues of version control, security storage of info, no proof of what was agreed. There is no date stamp for transactions. A lot of that gets lost in email exchanges and phone calls. “Our sourcing platform,” says Shannon, “can be set up very quickly, involves little training, can be done on a tablet, and doesn’t require integration into your back office system — you can set up a simple sourcing environment in days.”

The people at Medius are buyers, and they have built this system for buyers to keep the whole business connected.