“Perspective is worth 80 IQ points.” – Alan Kay
There is little doubt that organizational effectiveness is reliant upon actionable intelligence, and the capacity to view things in their true relations or relative importance.
Further, today’s high performing procurement organizations seek to sustain the value of all procurement levers (strategic sourcing, demand management, processing efficiency, supplier relationship management, etc.) – each of which rely on various, yet distinct, “perspectives” of supplier information.
As an example…
ERP systems are very effective at managing “the transactional” – and, in order to be effective, limitations have to become inherent within the final solution. One doesn’t have to look too deep into a supplier master to find duplicates. In most cases, however, they are not true duplicates, but, instead, minor variations, such as: different remit to addresses, different ACH information, different internal organizational relationship, etc.
Further, it is commonplace for multiple ERP systems to exist, whether due to localization requirements where the ERP system couldn’t easily adapt to, an acquisition, or other.
Regardless of whether the ERP perspective of supplier information is useful across all stakeholders, this perspective remains paramount to the efficiency within transaction processing (PO, AP, etc.).
Is the data accurate? Was their oversight into what is added/updated within the supplier master? Can I quickly identify the exact supplier record needed? Is AP optimized?
Suppliers have their view of a relationship, or set of relationships – and it most likely does not match the ERP perspective.
Does the supplier have one place to manage all their relevant information? Is it easy, or are they incented, to maintain accurate information? Can the supplier easily engage with your organization?
In few cases, a “supplier” is a single entity. In many cases, the “supplier” consists of multiple entities, whether due to acquisitions, logical separation of lines of business, or tax purposes. Case in point: HICX Solutions, a relatively small company, consists of three entities. HICX Solutions Limited, based in the United Kingdom, is the ultimate parent; however, HICX Solutions Inc. (United States) and HICX Solutions JLT (United Arab Emirates) are fully functioning entities.
Did you know that Barclays has over 298 subsidiaries? What about Cox Enterprises with over 300 subsidiaries?
More often than not, it is the local supplier being engaged – and very rarely is it the global ultimate parent.
This perspective becomes crucial in leveraging spend (strategic sourcing), but it also becomes an important perspective in managing supplier risk. What if the “local supplier” you are engaged with has been solid, but another branch of the supplier is failing and putting the whole supplier organization at financial risk?
How quickly can you roll up spend? How easily can you identify risk or performance across the whole, or even portions, of the supplier organization?
The logical deduction, given the fact that suppliers often consist of many entities, is that the buying organization(s) do as well. Whether through wholly separate legal entities, or through the various business units, suppliers often have multiple points of contact (relationships), or engagements, within the organization.
These relationships drive operations. How the supplier performs is tracked. What the risk level is monitored. Ensuring the supplier is in compliance as mandated.
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This perspective is where the feet hit the street.
Do you know who all, internally, is engaged with a particular supplier? Can you track supplier performance by engagement? How do you manage different compliance requirements, based on location, type of engagement, or other? How do you logically separate master data, such as remit to address, contracting address, or other?
Due to the large number of variations within business requirements, and its corresponding information, the ability to link information together, create/maintain the appropriate perspectives, and find efficiencies becomes, in and of itself, daunting, if not impossible, without leveraging the right Supplier Information and Master Data Management platform.
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Competition, expansion, and regulations will continue to increase the demand for better, and actionable, supplier information. Unfortunately, however, “traditional” systems will continue to struggle with adapting to the ever-changing needs – and the question becomes, “how will you enable your organization to view things in their true relations, and within their relative importance, and benefit from an increased organizational intelligence quotient?”