June 27, 2017

Why a Single System for Supplier Management is a Waste of Money

This post has come about thanks to our experience in the auto-retail sector. When companies continually grow by acquisition, there has to be a better way to unify supplier management systems than by simply removing what is in place and replacing it. It will only damage the bottom line heavily.

In this exciting world of globalisation in which organisations happily straddle numerous regions, it is more vital than ever to retain control over your processes. After all, small savings for a large company really do add up, especially when you are dealing with a large volume of data.

Marginal gains don’t just save you a few thousand here and there, they save you millions.

So, what should you prioritise when you consider new technologies, specifically, what should you prioritise in the supplier management arena?

When we first started talking to AutoNation, the largest Auto Retailer in the US, the conversation was very much around the idea of having a centralised system for supplier data and information management. Interestingly though, supplier data and information management turned out to be more of a Finance conversation than a Procurement conversation.

Whilst they wanted to unify their systems, it wasn’t a case of ripping out everything and trying to force one system on every individual office and region. That just wasn’t an option. Even if it was, it wouldn’t have been very useful. The reason for this is that automotive retailers grow through acquisition, and new acquisitions mean new systems. The cost of constantly ripping out systems and installing their own version would have been prohibitive.

In industries like auto retail, margin growth comes from every marginal gain that can be squeezed out by improving every element of operations.

When thinking about systems specifically, you really need to consider how you can be central and integrated without ripping out your existing infrastructure. It becomes a case of how can you be faster at integrating new systems (cost effective) instead of replacing them (very expensive).

This is not the only reason why CIOs, CFOs and CPOs are shifting their thinking about how technology which relies on supplier data and information, to function, should work together. Although it is refreshing to see executives coming around to a different approach, one which we have been fortunate enough to have led the way in.

The difference in the HICX system is that it works with well with other software. There is no need to rip out your expensively assembled array of finance, procurement and compliance software’s.

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It fits on top of your other systems and allows for centralised control and analysis. It means that a supplier can be maintained centrally and information is consistent and accessible across all departments. It means that the process for onboarding and ongoing management can be collaborative yet streamlined.

Technology must enable procurement and finance to work together across an ever-changing business landscape. “Integrated” is the key word – systems need to be connected, rather than searching for the magic bullet in which one system supposedly does everything.

The amount of time you can save purely in added efficiencies and new centralised processes delivers a very healthy ROI in a short time frame.

This is the future. Easy to use, efficient, centralised and accurate.

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