The supplier data quality dilemma – what it means for procurement

While it is widely accepted that digital transformation relies on the effective application of digital technologies, a recent report into the challenges and opportunities associated with supplier data in large organisations reveals that adoption of technology within Procurement has largely been hindered by lack of quality supplier data.

Just how much damage this can cause, and where it’s being inflicted, is the premise for the survey on which the report is based, carried out with senior procurement professionals at leading multinational companies.

Out of sight, out of mind

As in any walk of life, we soon forget about or ignore the things that are not readily visible to us. The report finds that while many procurement professionals might claim to be satisfied with their supplier data, 89% of respondents admit that they do not have total oversight, meaning many are overlooking issues that have some potentially serious consequences.

In the day-to-day, it says, these problems are hidden but they become far more poignant when there is a crisis, such as the recent COVID-19 disruption. An event like COVID-19 makes it necessary to assess the supplier base in order to determine its resilience, conduct business continuity planning and plan to offer support where it could be needed. However, with only transactional information available and no 360-degree view into suppliers, an enterprise is left without the necessary information to respond as quickly as it would like. With tens of thousands of suppliers to manage, the effectiveness and timeliness of this activity is severely reduced.

Taking ownership of supplier data

One of the problems the report highlights is that Procurement does not, or is not empowered enough to, take supplier data seriously, and that this is causing damage both to the business and to the people making careers for themselves in the field. It shows that 88% of the senior procurement people responding do not have ownership of supplier data management, and that supplier data management is often spread across various functions. 82% responded that because Procurement doesn’t have supplier data end-to-end ownership, it makes problems more difficult for them to address.

The report cites some first-hand insight from various industry professionals to respond to or cement the findings, one of whom is Nic Walden, a senior advisor in The Hackett Group’s procurement advisory programme. He explains, “We’re moving away from a world where everyone’s been operating in their own silos towards one where processes are more joined-up across the organisation, and even joining buyers to suppliers. That means we need to adopt new ways of working. We need to be more collaborative ... and organisations need to see the value in having quick access to high-quality master data.”

Recommendations are made throughout the report; one solution it offers to the ‘ownership’ problem, is “to create a single, unified environment for supplier data that is connected to all of the business’s essential systems. This can help to tackle data silos and ensure that different business functions have all the facts they need to make strategic decisions.”

“To avoid treading on any toes,” the report offers, “procurement could focus on how to provide other business units with actionable insights that will add value to their strategic decision-making processes …” and distinct examples of this are highlighted by Evan Quasney, vice president of the global supply chain LOB at Anaplan.

The bigger picture

When it comes to the bigger picture, the perception of Procurement internally can make it easier or harder to convince other stakeholders of the return on investment of strong supplier data management. What is interesting in the report is that respondents cited one of the key barriers to data excellence as the fact that improvement projects are rarely prioritised over other initiatives, with 66% of respondents stating that this was a top blocker holding the business back from data excellence. It suggests that Procurement has not yet properly communicated the financial cost of poor data quality to other functional leaders.

David Ford, global head of procurement at Freshfields Bruckhaus Deringer explains that Procurement professionals need to become commercial experts and consultants. They must demonstrate a forensic interest in their stakeholders’ needs, proving how the function’s expertise, deep understanding of markets, and awareness of an organisation’s leverage can deliver their goals more rapidly and efficiently. “That gives procurement the right to challenge more, and to collaborate with strategic suppliers to accelerate transformation and delivery,” he adds.

A voice at Board level

The report also reveals that Procurement needs to look at the bigger picture when it comes to the benefits of strong supplier data management. Respondents to the survey ranked risk reduction and mitigation as the biggest benefit – and this is clearly important. But so too are more strategic goals such as becoming customer of choice for key suppliers, and using supplier data to support digital transformation efforts. By taking on these challenges, Procurement specialists may be able to tap the potential of supplier data projects and gain more representation at Board level.

The report is the result of a joint effort from supplier information experts HICX and specialist business content provider Raconteur. It is well structured, in-depth and hosts a wealth of advice from how Procurement can extract the necessary data from suppliers during the onboarding process to how to embrace a master data management programme. It can be downloaded here for free.

 

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