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Supplier Information and Lifecycle Management

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Efficiently managing supplier master files.

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Supplier Information and Lifecycle Management

  1. 1. June 24th, 2015 Amy Fong Senior Procurement Advisor/P2P Program Leader Supplier Information and Lifecycle Management
  2. 2. 2© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Supplier Information Management Supply MDM Supply Analytics & Intelligence require robust management of Supply Information and supporting Supply Master Data Suppliers and related attributes: Supplier type, status, contacts, certifications, etc. Items / Catalog Commodities / Categories Contracts (inc. std. terms & clauses) Roles / Employees KPI Types / Definitions ‘Supply Drivers’: •Assets •Products •Customers •Projects ERP Master Files / Fields Information (including external / unstructured content and ‘metadata’) Master Data (all internal structured data) Information Scope Information Value (H) Cost Centers  Knowledge Mgmt (e.g., supply category strategy and supporting knowledge)  Planning & Predictive Analytics (e.g., Price/Cost forecasting, supply planning, risk scenarios)  Reporting & Ad Hoc Analysis (e.g., spend analytics, bid analysis, supply base analysis)  Monitoring and Alerting (e.g., supplier risk/performance alerts)  Performance Measurement (e.g., CPO/Supplier dashboards) Supplier MDM Vendor Master File Maintenance Supply Data Governance and Information Architecture Supply Analytics & Intelligence Increasing scope and integration Transactional Data (ERP, eProcurement, etc.) Supply Information Management Enterprise MDM  All master data  IT/technically oriented  Biased towards structured data Metadata Analytics Intelligence Today’s Discussion
  3. 3. 3© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. (select up to three)  Time spent adding new suppliers  Times spent updating existing supplier data  Ability to analyze supplier spend, performance, and risk  Ability to enrich supplier profiles with additional data  Internal compliance, risk, P2P errors  Supporting multiple external regulations What are your main issues with managing the supplier master file?
  4. 4. 4© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. There are many opportunity areas related to the supplier master file: cash, cost, service, risk 10% 22% 33% 53% 68% Supporting multiple external regulations Internal compliance/risk and P2P errors Enriching supplier data with external info Analyzing supplier spending, performance Time spent managing supplier data What are your Main Issues Relating to Managing Supplier Information (select up to three) Source: "Driving Compliance, Risk and Bottom Line Benefits with Supplier Information Management“, ISM Webcast March 29, 2012
  5. 5. 5© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Having Procurement approve supplier setup to insure alignment with preferred supplier strategy is a best practice 26% 54% 23% 23% 44% 23% 7% 0% Peer Top Performer No approval is required to setup a supplier Procurement is responsible for approving PO/contract suppliers while all others are approved outside of procurement Business Managers approve all supplier setup request Procurement approves all supplier setup requests Primary Responsibility For “Approving” Supplier Additions (Percent of all Participants) Primary Responsibility For “Setting Up” Suppliers (Percent of all Participants) 26% 42% 16% 16% A separate supply data team is responsible for setting up all suppliers Accounts payable is responsible for setting up all suppliers Procurement is responsible for setting up all suppliers Procurement is responsible for setting up PO/contract suppliers while accounts payable or supply data team setup all others Increasing Trend
  6. 6. 6© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. For basic onboarding supplier setup checklists ensure broader supply management goals are considered Activity Stakeholder Verify all supplier contact information (company name, address, etc.) provided Accounts Payable, Purchasing Operations Check that supplier does not already exist in system, check for parent/child companies as suppliers Accounts Payable, Sourcing Check if there is an existing/preferred supplier in the system that can provide the product/service Purchasing Operations, Sourcing Identify category codes applicable to supplier Sourcing Ensure standard payment terms are established with supplier Treasury, Accounts Payable Perform Financial Stability / Credit Reports on suppliers that are of significant value or strategic importance Corporate Risk, Sourcing Verify Certificate of Insurance is on file for suppliers with significant onsite representation Corporate Risk, Facilities Expected Spend (i.e. strategic sourcing effort warranted?) Sourcing Identify that contract or standard terms and conditions are in place with supplier Sourcing, Purchasing Operations, Accounts Payable Verify W-9 on file before any payments are released Accounts Payable Check for P-card acceptance by supplier to encourage the use of P-card Purchasing Operations, Accounts Payable Check supplier and parent/child companies against restricted party lists Corporate Risk, Accounts Payable
  7. 7. 7© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Supplier master data is directly tied to sourcing and supplier management; procurement must be involved to establish data structure Sourcing & Supply Base Analysis Invoice & Payment ProcessingPO and Requisition Processing Supplier Scheduling Supply Data Management Receipt Processing Accounts Payable Sourcing Execution Supplier Management & Development Customer / Demand Management (e.g., NPDI) Procurement Function Management Compliance & Risk Mgmt P2P (Purchase-to-Pay) Pay (Finance)Purchase Source Manage Plan, Support, Transform Protect Source: The Hackett Group Procurement Process Taxonomy
  8. 8. 8© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Numerous Analytics Depend on Supplier Information. Do you want to analyze the data or wrestle it? • “Spent Analysis” (Basic) • Balance of Trade • Supplier Dependency • Supplier Segmentation • Supplier Performance (e.g., compliance analysis) • Diversity Reporting and Regulatory Reporting • Supplier Risk Analysis • Sustainability analyses • Regulatory reporting • Cycle times for supplier master adds • P2P error rates from supplier-related errors • Error rates (duplicates, miss-codes, etc.) • Level of supplier self-service • Supplier capability analysis • Working capital analyses by supplier • Others 10% 29% 43% 60% 75% Bottom Decile Bottom Quartile Median Top Quartile Top Decile Percent of analysis time spent collecting, verifying, and compiling data versus performing analysis and making recommendations? • How good are your supply analytics? • How good is your supplier data feeding them? • How well do you manage the supplier data as a firm? • What could you do with the time spent compiling it? Source: 2011 Hackett Procurement Benchmarking Database Supplier-related Analytics
  9. 9. 9© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Poll: Which of the following supplier facing activities does your current technology infrastructure support (select all that apply)  Setup of supplier payment data  Setup of supplier terms and conditions  Supplier financial screenings  Tracking of supply chain locations  Automated checks against third party databases (ex. FCPA, OFAC)  Pre-qualification of new suppliers  Performance management  Risk management
  10. 10. 10© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Supplier Information has undergone a transformation Fragmented  Consolidating Siloed  x-Functional, x-referenced Internal  External Structured  Unstructured Historical  Predictive / Intelligent Batch Mgmt  Real-time Replicated  Indexed / Self-Service Process-driven  Process-driving Data Info Knowledge/Intelligence "For integrated systems, 75% of the effort and cost is process reengineering and data cleansing and creation, and 25% is the I.T. portion. When people say their systems didn't deliver, chances are they missed the 75% they should have been working on“ Larry Kittelberger, former SVP/CIO Honeywell Traditional Vendor Master “SIM” or “SLM”
  11. 11. 11© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Leaders are Evolving their SIM Capabilities Vendor Master File Focused primarily on ERP/e-Procurement fields needed to place POs, pay invoices, and analyze spend Supplier Information Management (SIM) Organizing and managing all key supplier information more efficiently and effectively. Supplier Lifecycle Management (SIM 2.0) Tying information into knowledge, intelligence, and analytics  AP and Purchasing Ops biased  Data governance (who can do what to which fields)  Data integration (e.g., across multiple VMFs)  Data quality for spend analysis  “Virtual Supplier Master”  Starts earlier in lifecycle (e.g., pre-registration via supplier portal)  Focus on hosted supplier self-service  Inclusion of document- based and/or external content  SIM application vendors: “SIM Platform”  Increasing level of bi- directional MDM integration  Workflows driven by custom supplier attributes and other rules (process, regulatory) to support:  Supplier Performance Measurement  Regulatory Compliance  Supply Risk Management  Intelligence from “Supplier Network”  Integrating supplier data to analytics (e.g., supply base segmentation analysis)
  12. 12. 12© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Supply Information Mgmt is foundational to Supply Analytics & Intelligence, a core Procurement capability
  13. 13. 13© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.  Yes – Procurement, Finance, IT and other supporting functions have clear roles  Somewhat – Could be better  No – Supplier adds are not monitored and supplier content is not harmonized Do you have a clear governance model for supplier data?
  14. 14. 14© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Supplier Information Governance shall…. …be the responsibility of Procurement / Business…and supported by IT …be transparent, with clear visibility as to how and when supplier master data decisions were made and who made them …have decisions, processes, and controls be auditable; they will be linked to stakeholder requirements …support a global standardization of enterprise data, but also be tiered to support Global, Regional and Local governance …ensure a common global definition of each supplier master data element and common global definition of business rules that apply …continually monitor the quality of critical supplier data items Guiding Principles for Effective Supplier Information Governance
  15. 15. 15© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Key Principles to build into your Supplier Onboarding and Information Management Process Collaboration – What is the role Procurement and AP play a role in approving and adding new suppliers? Supply Base Strategy – Is the new supplier necessary? Is there a Preferred Supplier who could meet this need? Risk Management – Has the supplier passed an initial risk profile screening? What ongoing management P2P Channel Strategy – How will requisitioners buy from this supplier? How will they invoice? How will we pay them Working Capital – Have standard payment terms been negotiated and setup? Do they match with the organization’s working capital strategy? Performance Management – How are supplier KPI’s measured and how is performance managed?
  16. 16. 16© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.  Adopt the “long-term quick fix” view – View SIM and “I” holistically. Not just MDM of ERP vendor master files. Build an equally holistic business case with clear KPIs and capability metrics. – Create awareness of the SIM-related risks and rewards. Find champions. Educate. ‘Benchmark’ and explore vendors to create excitement and buy-in. – Use “organizational judo” to gain support: Risk, IT MDM, sourcing, diversity, ‘GBS’, Lean are all supported by SIM. Take an inventory of internal efforts. Integrate. – Implement in waves and use self-funding, bundling, phasing, etc.  Work with IT and plot your overall solution approach – Pick the right solution approach before just searching for the silver bullet. What do you really need now and in the future? – Think through the architecture Work w/ IT, but build out your own CoE in this area a it relates to analytics and intelligence Habits of Highly Successful SIM
  17. 17. 17© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. How to justify SIM to for supplier-information related needs? 1. Improve Efficiency of Supplier Master Data Management 2. Improve Efficiency of broader SIM-related processes embedded in other supply processes 3. Improve Effectiveness of Supply Processes (operational and analytical) that impact [spend] cost, cash, service, and risk  Value of Supplier Identification/Innovation  Value of Supplier Performance Management  Value of Risk Mitigation  Etc.
  18. 18. 18© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. All your suppliers. All in one place. Simplify your supplier interactions with a platform built for business-to-business collaboration.
  19. 19. 19© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Tradeshift is a supplier collaboration platform that connects buyers, suppliers, and all their processes in one global network. We help businesses transform the way they work with suppliers today – and adapt to whatever the future brings. All Your Suppliers Onboard fast & collaborate in real time with your entire network. Powerful Platform Respond to your growing business needs with apps on our flexible, open platform. All Your Spend Manage more of your spend (direct, indirect, services) than ever before.
  20. 20. 20© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. B2B Network & Extensible Platform Procurement AP Automation Working Capital Solutions Supplier Management Apps A Supplier Collaboration Platform
  21. 21. 21© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited. Q&A Amy Fong P2P Advisory Program Leader The Hackett Group +1.408.887.7335 afong@thehackettgroup.com Vishal Patel Tradeshift Head of Solutions Marketing +1.781.492.2525 vpa@tradeshift.com

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