Three tips for successfully onboarding new suppliers
Supplier Management is a discipline that enables businesses to control costs, drive service excellence and mitigate risks in order to gain increased value from suppliers during their relationship lifecycle. The cost of managing suppliers can be substantial, but it doesn’t have to be. All it takes is a little analysis and good planning.
Below are three examples of good practice that begin from the stages of onboarding and how it could help save costs and time.
Operate a single profile for all your suppliers
Operating with multiple supplier databases is a breeding ground for data inaccuracy and a drain on your admin resources due to the need for version control, cross-referencing and double-checking of data.
For example, if your supply chain team is sourcing raw materials and products, whilst negotiating contracts independently from your purchasing team, it’s likely that there will be multiple supplier databases in play. Therefore, it will be challenging to get central visibility of what your supplier relationships are not just company- wide, but on a global scale. It will be even more difficult to gain visibility of who all your subcontractors are, or even third party managing agents for outsourced products and services. But easy visibility to this information is vital.
By creating and providing access to a central supplier profile for your entire organisation you will be able to gain transparency of the whole business and supply chain process. In order to avoid the costs associated with getting a single view of real-time supplier information, that’s accurate and up-to-date, you should share this responsibility with your suppliers. Suppliers should be connected to your profile through a portal so that they can input the information directly, leaving your supplier management teams with more time to focus on strategic relationships.
Have a single defined process for supplier authorisation
You may have a central database for supplier profiles, but no process in place that uses intelligent logic to guide the authorisation process. If your whole business does not understand the steps and business functions a supplier needs to go through in order to become approved, then potentially risky suppliers could slip through the net. This scenario could cause long-term damage to your business if the supplier is discovered to be using slave labour, or hazardous materials for the end-consumer and the environment, for example. The bad publicity and legal costs as a result could be sizeable.
Instead, you need a system that has a set authorisation workflow, which identifies the functions across your organisation that need to be involved. As well as what checks need to be in place and by who. You should have a central, predefined method of determining exactly who needs to review and approve each supplier in order to become fully authorised. The system should also have the capability to upload all required documentation so everything is in one place and easily accessible.
Working in this way is best practice to ensuring your business is operating with those companies who meet your organisation’s minimum standards across multiple compliance measures, from credit ratings quality assurance and safety through to corporate social responsibility and ethical standards.
Cleanse data and expired documentation
You may have a central database for supplier profiles and store all of your supplier documentation in one place alongside them. You may also have a defined workflow and process in which to setup and authorise new suppliers across your entire business. In addition, suppliers could also be accessing your system directly so that they can input the most up-to-date information to save you time. However, if the information that is added goes out of date, or documents expire and you do not know about this, then this single set of supplier information is still inaccurate and data quality is key for a true view of your entire supply chain operations in order to make informed decisions.
Therefore, your system needs to have rules and alerts in place that tell you when data has changed, when it needs to be checked, or when a new audit or authorisation process needs to take place. It is no good having access to a single set of data if it is still wrong and it will not protect your business against any non-compliance as a result.
We’ve all heard the saying ‘time is money’, and there’s no denying that saving costs often hinges on saving time. Onboarding new suppliers should be a streamlined process that takes into account all of your business functions and requirements, as well as ensuring that data is always the most up-to-date. This clear outline will also help your suppliers, as it will enable them to see and understand what your expectations are and how they may not just meet, but exceed them.
By implementing a process such as this you will have more time to spend on strengthening supplier relationships, looking for strategic opportunities, developing innovative new products and exploring new initiatives and markets.
5 Minutes With: Jim Bureau, CEO Jaggaer
What is data analytics, and why is it important for organisations to utilise?
Data analytics is the process of collecting, cleansing, transforming and analysing an organisation’s information to identify trends and extract meaningful insights to solve problems.
The main benefit for procurement teams that adopt analytics is that they’re equipped to make faster, more proactive and effective decisions. Spend analysis and other advanced statistical analyses eliminate the guesswork and reactivity common with spreadsheets and other manual approaches and drive greater efficiency and value.
As procurement continues to play a central role in organisational success, adopting analytics is critical for improving operations, meeting and achieving key performance indicators, reducing staff burnout, gaining valuable market intelligence and protecting the bottom line.
How can organisations use procurement analytics to benefit their operations?
Teams can leverage data analytics to tangibly improve performance across all procurement activities - identifying new savings opportunities, getting a consolidated view of spend, understanding the right time for contract re-negotiations, and which suppliers to tap when prioritising and segmenting suppliers, assessing and addressing supply chain risk and more.
Procurement can ultimately create a more comprehensive sourcing process that invites more suppliers to the table and gets even more granular about cost drivers and other criteria.
"The main benefit for procurement teams that adopt analytics is that they’re equipped to make faster, more proactive and effective decisions"
Procurement analytics can provide critical insight for spend management, category management, supplier contracts and negotiations, strategic sourcing, spend forecasting and more. Unilever, for example, used actionable insight from spend analysis to optimise spending, sourcing, and contract negotiations for an especially unpredictable industry such as transport and logistics.
Whether a team needs to figure out ways to retain cash, further diversify its supply base, or deliver value on sustainability, innovation or diversity initiatives, analytics can help procurement deliver on organisational needs.
How is data analytics used in supply chain and procurement?
Data analytics encompasses descriptive, diagnostic, predictive and prescriptive data.
Descriptive shows what’s happened in the past, while diagnostic analytics surface answers to ‘why’ those previous events happened.
This clear view into procurement operations and trends lays the groundwork for predictive analytics, which forecasts future events, and prescriptive analytics, which recommends the best actions for teams to take based on those predictions.
Teams can leverage all four types of analytics to gain visibility across the supply chain and identify optimisation and value generating opportunities.
Take on-time delivery (OTD) as an example. Predictive analytics are identifying the probability of whether an order will be delivered on time even before its placed, based on previous events. Combined with recommendation engines that suggest improvement actions, the analytics enable teams to proactively mitigate risk of late deliveries, such as through spreading an order over a second or third source of supply.
Advanced analytics is a research and development focus for JAGGAER, and we expect procurement’s ability to leverage AI to become even stronger and more impactful.