Supplier Information Management solutions: What options should you evaluate?
by Duncan Clark on January 6, 2021
Options for Supplier Information Management: Solutions Evaluation
As part of digital transformation initiatives in Procurement, one of the areas that will be very much in scope is that of Supplier Information Management, or SIM. Supplier information management describes a framework or governance structure for collecting and validating all data relating to the onboarding of suppliers and for the maintenance of that data during the relationship with the supplier, and beyond. This includes data relating to any aspect of the relationship, such as credentialing, transactional information, risk and performance data, regulatory information and certificates; combined with analytics.
Enterprises looking to deploy a Supplier Information Management solution have a number of options, each with their own pros and cons. All too often organizations choose a route that can lead to up to three years of delay and/or wasted investment due to some of the disadvantages of a specific approach. This evaluation considers therefore the four main options that are available, with an analysis of the benefits and drawbacks of each approach:
Use existing P2P/S2P suites with modular Supplier Information Management
Perhaps inevitably, organizations that have invested heavily in procure-to-pay (P2P) or source-to-pay (S2P) solutions want these solutions to do more to help with the underlying issues that procurement teams (and the business buyers that they support) face.
Benefits
- Aligns with a ‘vendor consolidation’ IT strategy by leveraging existing investment in P2P or S2P software
- It is easier to make the business case as it can piggy-back off a larger P2P initiative, rather than requiring its own separate business case
- Access to supplier networks means that suppliers may not have to provide information multiple times for different customers – although only if suppliers are prepared to become part of a network and only if the information is of good enough quality for the buying enterprise
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Drawbacks
- Suites are not designed for the huge variety in supplier base information
- They facilitate transactions but are not designed to create master vendor records. Ask yourself: “Are you onboarding a supplier to your procurement suite, or are you onboarding a supplier to the enterprise?“
- Obtaining a single version of the truth is difficult:
- Direct and indirect suppliers are almost never managed in the same suite
- Suites in enterprises have grown organically over time or through acquisitions, which means they contain multiple vendor master records and therefore no single version of truth
- Requires investment in middleware for integration
- High integration failure rates across systems means manual intervention is required. This decreases automation and drives up operational costs and TCO.
- Automation is limited to use cases within each individual suite, i.e. it is not possible to automate processes across suites
- Supplier self-service limited to onboarding with little provision for ongoing data management and lifecycle capabilities
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For more information, please see the white paper: Risks of Using P2P for SIM
Use a multi-domain Master Data Management (MDM) solution
Multi-domain MDM solutions provide a platform for capturing all master data records from different sources and applications and can consolidate them into a single, centralized location.
Benefits
- Centralization of data into a single location outside of transactional systems
- Allows for good data governance and control/maintenance of inputted data
- A single, consistent, authoritative version of the truth for core data is achievable. It provides the ability to consolidate and clean data.
- Helps to improve data quality across core data elements
- Offers a high degree of internal workflow capabilities and flexibility for data modeling
- Strong technical integration capabilities. Data can be made available across multiple systems and can be used for BI projects
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Drawbacks
- In many cases, you still need multiple multi-domain MDMs in order to achieve all functionalities required
- It is an IT-led solution to a data problem and, as such, tends to have a narrow focus which does not always consider wider business use cases for the data
- It runs counter to data democratization as ownership of the data should sit with those who understand the data
- Domain expertise is still required to fully realize the benefits of data integration and make them available to end users
- There is often no supplier portal; the solution is internally focused. This means there is no workflow to allow for collaboration with the suppliers. A solution is to buy a workflow tool to overlay on top of the MDM platform
- While offering strong technical integration capabilities, generic MDM solutions lack the detailed context of integrating supplier data, particularly with the ERP(s), in the real-world. While theoretically possible, this is a big driver of cost in practice.
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For more information, please see the article: Multi-domain Master Data Management Won’t Fix Your Data Problems
Build your own system
Major enterprises have well-established methodologies to help project teams assess their options and weigh-up the advantages of buying off-the-shelf packaged software versus having a bespoke solution built, either in-house or by a 3rd party development team.
Benefits
- Potentially offers a completely bespoke solution tailored to the precise requirements of the enterprise
- The enterprise is in full control of the solution
- Specific use cases can be considered as part of the build
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Drawbacks
- Slow and expensive requirements gathering and design phases
- End-users know what they do today, but they’re not usually familiar with software requirements development, so the scope can change frequently during build
- Difficult roll-out and adoption phases. Custom applications don’t always start with the best user experience.
- Escalating project costs. Initial estimates often underestimate the complexity involved.
- Infrastructure costs for hardware, data centers and redundancy need to be managed and budgeted for by the project team
- It becomes a big commitment with high risk. Operations, support and need for a roadmap mean constant investment will be needed.
- Security challenges for custom-built software. Often only discovered over time, this can create further high risk for organizations handling supplier data.
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For more information, please refer to our exclusive free report Build versus Buy versus Low Code
Use a dedicated Supplier Information Management (SIM) solution
A data-driven platform evolved from MDM, catered to the needs of the management of supplier data and information.
Benefits
- It is faster to implement and provides quicker time to value due to its alignment with business requirements, such as the need for a supplier onboarding portal and ongoing collaboration with suppliers
- Data quality can be controlled by the domain experts
- Data can be checked and verified at creation, ensuring a golden record for master supplier data
- It integrates easily with other systems, such as ERP, as part of a Master Data Management (MDM) approach
- It gives ownership of the data – and more autonomy – to the business unit(s) to drive accurate insights and reports
- It supports the workflows of domain experts and can be configured to match bespoke requirements of the enterprise through drag-and-drop low-code customization
- By combining the four key elements (portal, MDM, workflow and integration) with domain expertise, dedicated Supplier Information Management offers the fastest route to true automation.
- It provides pre-built access to third-party data sources (or punch-outs) which can be used to validate data
- Supplier Information Management provides the best return at the lowest cost over the length of the project
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Drawbacks
- Where the IT department has vendor consolidation as a goal, an additional solution for supplier data may run counter and so require its own business case
- It requires broader stakeholder support and cross-functional collaboration (although this collaboration is the best outcome for the enterprise)
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For more information, please see the article: Multi-domain Master Data Management Won’t Fix Your Data Problems
