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Ten forces shaping supplier management.

Value creationSupplier relationship managementprocurement technologySupplier DevelopmentSupplier Performance+-

In this, the second of a two part guest post from 360 Supplier View’s Declan Kearney, he turns his attention to where supplier management is heading next and what’s driving the development.

 

Throughout 2013, supplier management practice and technology innovation have continued to evolve.

 

There are several themes driving increased adoption, including the following: the imperative mitigation of internal and external vendor-related risks, regulatory demands for improved processes and controls, sub-tier supply chain disasters and, on the positive side, an increasing number of case studies that have proven the tangible value of investment in supplier management.

 

Here are some considerations of where things are going next, for large organisations at least:

 

1. Supplier management will only succeed if introduced as a long term, sustainable and coherent strategy that includes information, risk, compliance, relationship performance, CSR, spend, sourcing, contract and financial management elements.

 

2. Strategy execution needs to be treated not unlike a new business venture to include effective communication of strategy, vision and core, realistic objectives.

 

3. Objectives need to be aligned with enterprise-wide corporate objectives.

 

4. The term ‘business relationship management’ will evolve to incorporate the commercial management of internal (executive and management level, boards and investors) and external (suppliers, partners and customers) relationships.

 

5. The convergence between supplier management and governance, risk and compliance technology solutions is exciting although could further confuse and therefore stifle the market. Supplier governance and risk management also need to be aligned to the often more advanced practice of enterprise risk management.

 

6 . The application of more mature SCM best practice relating to ‘control towers’ and ‘platform thinking’ should be leveraged by new and existing supplier management providers.

 

7. Technology providers should, in my opinion, start to standardise the marketing language used in order to enable potential customers to evaluate like-for-like capabilities specific to their business requirements.

 

8. ‘Big data’ - in many ways by positioning supplier information management as an integral element, supplier management depends significantly on a broad range of structured and unstructured data and activities inside and outside both customer and supplier organisations. Big data and predictive ‘data analytics’ certainly represent the future while small steps are needs to ensure a manageable approach where information can be leveraged effectively.

 

9. Accenture’s acquisition of Procurian for $375m signals an exciting development in the procurement BPO space. It will be interesting to see how supplier management outside of core ‘financial management’ and ‘procurement’ will evolve within or alongside procurement BPO offerings.

 

10. Recent technology provider developments include the acquisition by SciQuest of CombineNet, the ‘bringing together’ of OB10 with First international Bank of Israel and the resulting creation of a new e-invoice analytics business and the increased collaboration between e-invoicing provider Basware and BravoSolution - more M&A and provider collaboration is anticipated.

 

As for the future of supplier management, I firmly believe that the impact is so significant that the case for investment in a standalone supplier management function is worth consideration.

 

Such a function would operate commercially and in collaboration with a range of functions and, of course, the supply base. At a recent pharmaceutical industry ‘think tank’, hosted by the Beyond Group, this theme generated much debate. While participants differed in their opinions, the one common belief was that supplier management needs to be far removed from the ‘cost/savings’ agenda of procurement - both in perception and in practical reality.


Declan Kearney is founder of 360 Supplier View. Follow him @360supplierview.

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