A recipe for procurement success – how to balance internal and external service provision (part 3 )

We launched our new research paper last Monday -  “How to balance internal and external service provision – key decisions for procurement professionals”.  In part 2 of this series, we looked at the first section of the Paper , which examines the concept of and process for combining internal and external service provision to drive procurement success.

Today we’ll look at the second part of the Paper, which considers Supplier Information Management (SIM) as a specific example of an area of activity that is particularly suited to external provision. So what exactly is SIM?

Supplier Information Management embraces the collection, evaluation and monitoring of information on suppliers and contractors including factual company information, risk evaluation, vendor appraisal and performance management.

Sounds pretty straight forward, but there is a lot of evidence that most organisations don’t actually have this sort of information to hand. Why is that? Let's see what the Paper has to say:

Largely because gathering and managing data is a labour intensive and time-consuming activity. Information changes, grows or becomes out-of-date constantly, so work needs to be continuous and ongoing. While tools to help automate the process have become much more useful and more widely adopted, there is still a certain amount of laborious work which cannot be fully automated and needs to be carried out in order to refine and verify data.

And SIM is increasingly important for procurement organisations. It is a central part of supply chain risk management, for a start – understanding suppliers’ situation from a financial, market or ethical standpoint is vital. But as we say:

..it isn’t just about risk management, important though that is. Enforcing organisational policies and standards includes elements of risk management …  But it goes beyond that in making sure we obtain consistency and (where it is important) control including that single view of supplier information and data across the whole organisation. Robust and accurate supplier information also enables and assists us to determine the best suppliers to meet our needs, making sure their capabilities fit the requirements of the buying organisation. That in turn leads to commercial advantage…

We then look at what  a successful SIM programme and platform should include, then finally look at why it is such a good candidate  for external provision. We give six strong reasons – here is just one of them!

Service providers have the opportunity to leverage their work across multiple clients-obtaining reliable supplier information is time-consuming and therefore expensive, so spreading that cost makes sense. And much of what is needed is common to all the potential buyers who may be interested in a certain supplier. So the economies of scale are obvious in terms of engaging a provider who can aggregate their clients’ requirements in the SIM field.

So, to sum up the whole Paper - in part 1 we discuss why senior procurement folk need to be thinking in a structured manner about how they deliver the results that their organisation requires of them. That delivery will almost inevitably include elements of both internal and external service provision, and working out what is best provided by external sources is a key skill for today’s procurement leader.

Then, when we look at specific activities, we explain why Supplier Information Management is both a key aspect of successful procurement delivery; and one that for a number of reasons is particularly well-suited to external provision.

Do download the whole Paper here and as always we’d welcome any comments on it – on this site or to me directly at psmith@spendmatters.com

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