2011 – The Year of Supplier Management in Europe?

For those with the distinguished misfortune to follow my words on a regular basis over on the US Spend Matters site, you’ll probably realize that one subject I tackle on an all too frequent level is the technology and automation area us Yanks often label as supplier management (also known, depending on company, analyst firm or vendor as: supplier information management (SIM), supply base management or vendor management).

By my definition, supplier management solutions comprises a range of different enabling functional focus areas: supply risk management, supplier/vendor performance management, the automated management of lifecycle details and administrivia (e.g., insurance certifications, credentials, quality/ISO processes, etc.) and supplier diversity, on this side of Atlantic at least.

In other words, this is pretty important stuff. And it’s largely been tackled in an offline manner in the past. Yet despite the importance of these different areas, general adoption of supplier management technologies in Europe (and much of North America) has greatly lagged relative to e-sourcing, eProcurement, e-invoicing, spend analysis, contract management and other areas. In fact, you might have read recently that Supplierforce, one of the few European vendors focused on this sector, entered voluntary liquidation in Ireland.

Yet I believe that 2011 could very well be the year in the UK and Europe where supplier management really begins to take hold in an integrated fashion. For one, as the economic uncertainty and default potential that continues to hover over Ireland, Spain and other member countries descends further, I think European firms are going to become increasingly concerned with monitoring risk in their supply bases and will want early warning signs that something may be amiss, especially given tightening lending standards and what feels-to-be an emerging cash crunch generated by an increase in late payments (and the degree to which average invoices are past due in different regions).

Moreover, as REACH/ROHS and new EU environmental regulations continue to drive additional supply chain scrutiny, I believe companies will look for ways to automate the collection of information that will enable them to certify their supply chains free of hazardous substances. Fortunately, supplier management technologies are finally starting to enable traceability and certification down to the item/part level rather than just the aggregate site or supplier level. The savings opportunity for automating these processes -- not to mention the ability to bring products to market that much more quickly -- could be a material driver of supplier management technologies.

Who stands to benefit the most from the embrace of supplier management? Certainly content providers such as D&B, Ecovadis, Equifax, Bureau van Dijk and others which offer supplier enrichment data. And vendors that offer supplier management applications such as Achilles and Xcitec (who we believe to be the adoption leaders in Europe), Emptoris, SAP, Oracle, Ariba, Aravo, Rollstream and D&B will as well.  But the biggest beneficiaries will certainly be the companies (and government agencies/departments) themselves that decide to take the plunge and focus on the broader issue of supplier management rather than simply trying to take out costs through sourcing or drive greater automation through P2P.

If you’re curious to learn more about the area, we encourage you to download Spend Matters free research briefs on the topic:

Leveraging Supplier Management Platforms for Multiple Goals: Risk Reduction, Supplier Diversity and CSR

Supply Risk Management – Segmenting the Technology and Content Landscape and Choosing the Right Category of Solutions

Supply Risk Management and Supplier Performance Management -- Managing Your Supply Base in Real Time

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