Let’s get over with flawed supplier data !Thierry Jaffry - March 9, 2017
In 2017, the supplier data management is still a challenge for many organizations, regardless of their size.
Some industries are more advanced on this topic: automotive & telecom has better average supplier data quality than Pharma and Retail for example, as stated in a PWC study about data management published in November 2011.
Drivers of such an initiative are mostly linked to risk and compliance monitoring (and pressure is rising in sectors like financial services in North America for example), but also cost and efficiency related.
A recent study from the Gartner evaluated the cost of supplier data management around
$500 per supplier annually (mostly people and systems), though the level of accuracy is still low.
Suppliers move, merge, change ownership, change names and locations – all of these impact the accuracy of your data which can cause processing errors or even worst, supply chain disruption.
And we don’t even talk about duplicates… (the famous supplier I.B.M, wait.. no… IBM… or I B M ?)
The average degradation of data is of 2% per month.
Considering the multiplicity of systems in the enterprise (several ERP, SRM, Spend Analysis, Reporting, Excel sheets, Risk assessment grids, Procure to pay…), it becomes complicated to build interfaces between all of these repositories to ensure consistent synchronization.
Here are therefore a few tips to improve the management of your suppliers’ data
Make this initiative a company top priority before starting any new system implementation. The success will be in part due to a strong executive sponsorship and involvement. In addition, it is a pretty good opportunity to review and improve certain processes
Invest in a SIM (Supplier Information Management system) which will be the golden record guardian of the supplier data, and send this information to all the systems of the company. Data inconsistencies usually come from the distribution of data ownership across many systems and business areas.
Define clear processes for onboarding, governance (financial, accounting, purchasing, etc.) and offboarding of a supplier
As far as possible, delegate the maintenance of the data to the vendor himself. Most of the systems now propose a portal where suppliers are asked to update credentials, data and contact information. Assuming that you plug a good validation workflow before publication of any change, that should really raise data accuracy and lower data management costs.
Regularly measure the quality of your data, for example by comparing your database master to a source of external data (CIP continuous improvement process). A yearly action should be OK.
Assign a role of “owner of the supplier data management process”, typically someone from procurement who will be incentivized on this subject, with clearly defined KPIs.
In conclusion the path will be certainly long to reach a cleaned and standardized unique vendor repository, with a harmonized onboarding process and centralized maintenance. But the costs and issues such as risk mitigation can no longer be ignored, for larger groups as for SMBs.
About the author
Thierry Jaffry has an extensive expertise in S2P projects working successively with Ivalua and Flucticiel software solutions and integrators. He is the man behind Simetryk.