In recent articles, we have discussed how to optimize the TCO, Value and Savings associated with your strategic sourcing efforts to make sure the “good stuff” actually flows to your bottom line. Once you have the contracts in place and you are comfortable that the savings will flow, you need to turn your attention to ensuring that your suppliers comply with the expectations set down during the negotiations particularly since you likely have tens of thousands of suppliers across your organization. This is where an automated supplier management system can really make a difference for you and your team.
It is important to recognize what exactly you’re looking at here. This is not about Risk Management or responding to supply chain events. Instead, it is more an efficiency play. How do you reduce the amount of effort, resources and mistakes associated with maintaining your suppliers’ qualifications while still making sure that they are doing what you require of them? The least productive use of your limited time together is talking about how they need to update some random green certificate or insurance requirement.
To that end, some suggestions on how to let your technology help you improve supplier compliance include:
- Give them the keys
- Quarterly Business Reviews
- Simplify, simplify
- Improve your communication
- Centralize your data
- Give them the keys – One of the biggest challenges to maintaining supplier compliance is the ongoing upkeep of information. Your platform needs to allow suppliers to update their own information if you want any hope of keeping things up-to-date. In this way, the responsibility for maintaining current information can rest with those to whom it is most important: the supplier. For example, set alerts and reminders for suppliers whose certifications are expiring so that they are the ones to provide new copies rather than you having to chase them down. They are also going to know when things change much sooner than you.
- Quarterly Business Reviews – They Matter – It is easy to get caught up in your day-to-day chores and not find time to do things that matter but may not show immediate returns. Quarterly Business Reviews (QBR’s) are a good example. Unfortunately, QBR’s in the real world can often turn into either extended sales pitches or “housekeeping” sessions where you only review required paperwork. Instead, we suggest using a system-driven checklist to highlight areas that need attention prior to the QBR. A little homework prior to the meeting will make it much more productive for everyone involved.
- Simplify, simplify – It can be tempting to ask for a lot of information. Finance, risk management, diversity councils, sustainability teams, and others all want information. Most important is the needs of the business spend owner who is the direct customer for the supplier in question. While everyone has needs, we strongly suggest that you limit the amount of compliance requests that you put on your suppliers. Remember that they have other customers to whom they need to provide information as well. Wherever possible, go for industry-standard requirements and use company-specific ones only where absolutely necessary. Your software consultants can be an excellent source for this kind of information.
- Focus on communication – The key challenge in effective supplier compliance at a large organization resides not so much in how you deal with a small number of strategic suppliers. You are going to pay attention to them no matter what. Instead, it is about how to best communicate and collaborate with your larger number of non-strategic suppliers. Critical to this is having an automated system where you can direct communications to specific segments of your supply base (e.g. a particular category) without having to create individual emails. Instead, look for a system that will allow you to target your communications quickly and easily to exactly the group you need.
- Centralize your data – Perhaps nowhere in supply chain and procurement is it more critical to have easy, centralized access to information. With segmentations ranging from line-of-business to geography to category, your information will likely be spread across many stakeholders, offices and individual computers. It is imperative that you establish an easy way to aggregate and centralize the information without creating the dreaded “share drive-from-hell”. To do this, look for two things. First, a system that easily compiles ALL your suppliers in one place rather than dispersed across the organization. Second, a platform that is easy enough that your stakeholders will actually use it.
By using these tips, you will be able to minimize the amount of time you and your suppliers need to spend on minutiae and maximize the time spent on new and innovative solutions to business problems.
For more information on these approaches or to learn more about how Scanmarket can help you achieve your business objectives, please visit us at www.scanmarket.com or contact your Scanmarket Account manager.
Easy. Proven. Results.