Anyone who has tried (and struggled) to use their ERP to manage vendors will know how confusing this is.
A few years ago however, many procurement functions would have battled through this pain with gritted teeth and attempted to manage their suppliers using transactional systems such as P2P.
Thankfully, the last few years has seen the industry shift towards the ‘data first’ approach and see the value of building data foundations.
This blog highlights four key factors that need to be covered to ensure good-quality supplier data, both now and in the future.
The complexities of managing supplier data
Managing supplier master data can be incredibly complicated, considering that some organisations work with thousands of vendors globally.
Just think about the information your business is capturing on a daily basis – data about legal entities, tax IDs, payment accounts or locations, different business units, divisions and regional vendors, and so on. That’s before you even take into account quality problems and errors such as duplicates, as well as regional regulations and compliance issues.
The most daunting fact for anyone in procurement is the understanding that the amount of supplier data you have is only ever likely to increase.
Tackling the supplier master data problem
The question is, how can you tackle this growing problem? Well, put simply, the key areas you need to address are:
If you are struggling with some or all of the issues above, it’s likely that you are a large and complex organisation (i.e. one with different business units, locations, systems, etc). As such, to create an efficient process for managing information, you need ‘vision’ across the business – a company-wide understanding of what supplier master data is used for, and executive buy-in in order to make changes.
“Do we really need 100 versions of X supplier?”
“When does a supplier get added, and in what form?”
These and other key questions have to be answered and decisions have to be made, which is why you need a data governance and stewardship body to oversee them. Such a body will have the authority to define standards and definitions and make rules that other parts of the organisation must follow.
To ensure those standards defined by the data governance body are followed, a process must be enforced. Whether it is through identifying duplicates, the approvals needed to consolidate records, change requests, or attaching a supplier to an existing record, the right processes and systems ensure the right sequence of activities is followed.
The system that manages the master data, whether that’s an ERP or ideally a supplier information management (SIM) solution, needs to be accountable for collecting, maintaining and syndicating the vendor information.
This includes running matching strategies, match / merge, governance oversight, sending master data to downstream systems and providing the appropriate ‘views’ of the supplier. This means the system must understand the possible variations of a supplier, such as:
- A supplier ‘family’ view (an aggregation of suppliers into family trees, or relationships)
- A ‘system landscape’ view (a view which has been translated into appropriate record structure, per downstream system)
- A ‘supplier’ view (a single view of the supplier from the supplier’s perspective)
The benefits of a flexible system
It’s also important to recognise just how important genuine flexibility is. As time goes by and changes are required, you’ll need a system that allows for quick, easy and cost-effective changes. If this isn’t treated as a priority then all you’ll end up with is an expensive mistake and a shiny brand name.
If you can get each of the four focus points above working in harmony, you’ll be in a great position to empower your organisation and gain insight into your supply base. All while finding other efficiencies in your organisation / suppliers as your team is able to spend its time making productive strategic decisions.
If you found this article informative, you may also want to take a look at our other resources on our blog here.