An organisation can’t be truly effective without knowing its vendors. That may sound like a rather absolute statement, but it’s one we wholeheartedly believe to be true.
Gaining a better understanding of who your vendors are allows you to improve all aspects of vendor management, such as sourcing, category management and payment.
As such, it should be a high priority for organisations to focus on improving their vendor master data management processes in order for them to gain that greater understanding.
Master Data Management (MDM) allows you to create a single version of the truth for all data related to your vendors, which informs all of your organisation’s dealings with them going forward.
Why organisations struggle with Vendor Master Data Management
There seems to be a clear disconnect between where many CPOs would like to be, and where they are with regards to the inputting of data and use of analytical information.
Take for example this quote featured in The Wall Street Journal: “The implications of this apparent gap between opportunity and action are considerable, given that 65 percent of procurement leaders report limited or no visibility into their entire supply chain and have yet to make the most of digital tools at their disposal that could help to provide a more complete view.”
It’s clear that tackling this lack of master data and gaining an understanding of what’s going on in the supply chain is essential for organisations that are serious about progressing. Without great data and visibility, it’s hard to make the right decisions that will help you stay ahead of the competition. The companies that are currently thriving the most are ‘digital natives’ who live and breathe data.
As such, sometimes it’s better to go back to basics and look at things from a new perspective. Of course, this is often easier said than done. Many businesses don’t have the kind of IT infrastructure required to manage complex vendor relationships. Common obstacles include issues with the quality of the vendor master data, too much overlapping of data across the many different silos that large organisations typically have, and a lack of effective data governance policies.
What are the benefits of Vendor Master Data Management?
The good news is that, while it’s clear that the aforementioned disconnect ‘between opportunity and action’ does exist, there does seem to be an understanding on the part of CPOs and senior procurement professionals that things need to change. According to Gartner: “By 2022, 90% of corporate strategies will explicitly mention information as a critical enterprise asset and analytics as an essential competency.”
In the same way that CRM solutions are a crucial feature of the sales and marketing side, and ERP software is an essential aspect of finance management, SIM (supplier information management) platforms are the key to enabling digitalisation on the buy side.
Implementing a vendor master data management solution is therefore, in our opinion, the obvious answer to many of the questions that organisations will have. Here are some of the major benefits:
- Vendor master data management empower organisations to manage 100% of their vendors and gain complete visibility
- It helps to guarantee the quality of the data, and removes the risk of storing inaccurate or inconsistent information
- It enables data to be centralised and standardised across the organisation, making it easier to complete critical tasks such as reporting (on ROI, for example), onboarding and integration of vendor data in back-end systems, and the identification of any duplicate records that might exist
How Vendor Master Data Management makes reporting easier
We hope this blog has provided you with at least a brief overview of how vendor data management processes can help your organisation to improve its procurement processes.
By not only improving the quality of your data, but also managing it more efficiently through the use of a specialised vendor management solution, you’ll be in a stronger position to report back to the business on questions such as:
- How much do you spend with any given vendor?
- How many transactions have there been between your organisation and that vendor?
- Is the vendor working with any other teams within your organisation?
- Is the vendor actually performing well and meeting your requirements?
- Are there any risks associated with the vendor that could have an impact in the future (e.g. location, labour practices, etc)?
If you found this blog useful then you might also want to take a look at our other detailed reports and white papers, which you can find here.