Building a foundation for source-to-pay
Procurement Trends, Source-to-Pay, E-procurement
It wasn’t too long ago that a colleague of mine suggested that the worst thing an organization could do (when building up their source-to-pay) was to focus on the low-hanging fruit. In this blog, I’m going to offer my thoughts on what is not low-hanging but highly useful to creating a strong foundation for source-to-pay.
It will surprise no one that the source-to-pay process - when digitalized - relies almost entirely on quality data. When we digitalize, we attempt to automate, we attempt to remove ambiguity, we want to encourage analysis. None of this is possible with flawed data. Sure, sure, that’s obvious, and yes, yes, it is obvious but how do you enable it? What type of tools are required to enable the people, processes and culture to execute on the ‘high-quality-data’ mantra? Well, that’s a conversation worth having.
Today, I’ll talk about 3 (it’s always three isn’t it) things you can do to create the right environment to build a data-enabled foundation into your source-to-pay process.
Number 1 - Don’t think you can get away with substandard supplier information management.
After overcoming the hurdle of supplier engagement (ie: reaching the supplier and getting them to onboard themselves into your e-procurement process) your supplier(s) will then need to create their profile in your system. This sounds like an easy step but in reality, your SIM (supplier information management) system needs to ask all the right questions - and it’s no small amount of effort on the part of the supplier to create - and maintain - their profile. But this is number 1 - a robust SIM system will offer both self-service tools to your suppliers and helpful hints/alerts to maintain their data. And this includes all the basic data plus items like certifications which relate to your own purchasing policies (did someone mention CSR?).
Number 2 - Add a second layer of data to that offered up by your suppliers - specifically, both the qualitative and quantitative information you gather as a buyer.
On eBay or Amazon, it’s normal to check the supplier rating or product reviews - well, modern B2B e-procurement solutions can offer the same functionality. Actually, there are quantitative data elements like late delivery, partial delivery, etc. which can be captured automatically and then there are other less quantitative data points which can be called 'experiences' and these are also possible to gather quite easily from your people who interact with the supplier or the goods/services which are delivered. Gather these for the exact same reason that as a consumer you find them useful - they help inform your decision making such that you (and your organization) buys from the suppliers who provide the best goods and services.
Number 3 - Do you have a content strategy?
I thought not. In this case, content relates to catalog content and strategy is all about how you ensure your people have access (within your e-procurement system/process) to all the various items they need. Bear in mind, it’s not enough just to say that 100% of your procurement goes through your system - it’s a strategy after all. You need to have 100% coverage as cheaply and easily as possible. I’ve written (and given webinars) on the topic before but in short, a content strategy is a mix of the following: Key supplier delivering their catalogs directly to you which become ‘internal’ in your shop. Other key suppliers require punching out - no problem - these supplier catalogs can in some cases be represented internally in comparisons, etc, but for the most part, these are considered ‘external’ content. Lastly, there are still many, many suppliers offering basic commodities which we like to call your ‘long-tail’ suppliers. Here you need to consider an alternative to individual on-boarding and instead, look for a marketplace which has already done the heavy lifting, and then integrate with that marketplace. APIs make this a relatively straightforward process and it’s true that you are giving up negotiation on prices, terms & conditions but it’s also true that those negotiations rarely offer a positive cost-benefit outcome.
That was a short, 3 part teaser to building a foundation for source-to-pay. Don’t hesitate to ask me if you have any questions.
Rowan has more than 10 years of experience in the purchase-to-pay arena. During this time, he has managed the go-to-market for a diverse set of portfolios including Accounts Payable Automation, B2B Networks, Financing Services, eProcurement and Product Information Management.
Read more blog posts about Source-to-Pay
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This blog is a follow-up to a recent webinar (titled: Procurement & IT are Partners in Source-to-Pay) which featured a conversation with our Chief Architect for Source-to-Pay.