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Following up his guest post on March 5th, ‘The Evolution of Supplier Management', Declan Kearney of 360° Supplier View reviews the ultimate approach to and benefits of achieving the ‘360° view' of your suppliers.
Your suppliers represent material risk to your business. However, the same supply base represents a true source of competitiveness, innovation and risk mitigation. The most complete, dynamic view of your suppliers is therefore imperative – in truth, such a view of suppliers should be a mandate issued by boards of directors and CEOs.
360° Supplier View defines supplier management as 'a commercial business discipline that enables the holistic, pro-active management and monitoring of suppliers [and partners] with the primary goals of maximising efficiencies and competitiveness and mitigating risk'.
To achieve the ultimate visibility, there is a multitude of sources that need to be considered. Once the scope is defined, with a focus on your strategic suppliers, stakeholders from across all supplier-facing functions will require their own version of the 'single view' – one from which they can make decisions specific to their business roles.
Effective aggregation of the most critical elements of the following key processes and activities contributes to the single view: transactional (procure to pay), spend, sourcing, contract, information, risk, performance, relationship management and sustainability/CSR. Other real-time and forward-looking activities include Social Supply Enterprise Collaboration and scenario analysis planning based on forecasting of future supplier-related business-impacting events resulting from political, competitive, social, environmental, regulatory and legal factors.
For stakeholders to effectively leverage the output, the single view should clearly communicate the internal governance, framework, processes, policies and internal and external resources relative to supplier management as defined for your business.
Integral to complete 'intelligence', Supplier Information Management ('SIM') must extend beyond transactional data to enhance each supplier-related activity and enable truly collaborative supplier management.
Sources of SIM include structured internal and supplier systems and staff and unstructured external sources, such as mainstream and social media news and sentiment, delivering supplier-specific insight such as market speculation/ M&A rumours, key staff changes and new product announcements. Key SIM elements include identification of suppliers by business unit, by category, by classification, by corporate linkage and by segment, insight into sub-tier suppliers and instant access to two-way supplier communications.
The challenges of duplicate vendor records, inefficient supplier classification schemes and lack of vendor set-up and data maintenance controls must be overcome in order to realise a complete, dynamic view of supplier spend, a key contributor to the 360° view.
Technology can play a key supporting role in delivering and leveraging the single view – for solution providers, creating a proposition that will address the requirements of a large number of customers, in turn creating a scalable commercial proposition, is no mean task as no two large corporate or multinational businesses represent identical requirements. Depending on the scope and number of sources of intelligence and number of suppliers, the role of automation, data analytics and potentially supporting services will vary by company.
Investment in realising the ultimate visibility of suppliers lags the equivalent investment in the single customer view in the same way that SRM fundamentally lags CRM by, on average, 10 years.
However, with the increasingly material impact of supplier-related activities, the elevated importance of and executive support for supplier management and ever-improving technology capabilities, achieving the single view is no longer a pipe dream.
Management of suppliers should no longer be viewed as a siloed activity of the procurement function – executed the right way, supplier management is a real source of business value.
The '360° customer view' gets a lot of attention, and resulting investment, in a market rightly dominated by incessant focus on the customer. Achieving the 360° supplier view represents a great opportunity to ensure that your delivery to the end customer, leveraging your suppliers, exceeds the standards of your competitors. The ultimate result is not about the best quality data – it's about leveraging comprehensive intelligence to forge ever closer relationships with those suppliers that impact most significantly on your profitability while minimising supply base risk.
Declan Kearney is founder and principal at 360° Supplier View.