Supplier Management: Why does the Foundation Matter?
“It is not the beauty of a building you should look at; its the construction of the foundation that will stand the test of time”
Often I am asked why we would walk away from potential opportunities to secure new customers. These are always difficult decisions, but logical ones – and I want to briefly explain.
As a general rule, it is always best to only chase business where you know your organization can help ensure your customer’s success. To lose site of this can only reflect poorly on your own quality of work. HICX Solutions offers a full range of supplier management solutions, from supplier onboarding through scorecarding and risk management, yet many don’t understand why we may walk from a scorecarding opportunity, as an example.
More often than not, we are approached with the following scenarios:
· “We are looking at implementing a performance management solution.”
· “We are looking at risk management (pick any of the thousands of focus areas).”
· “We are looking for a solution to assist us with FCPA, or UK Anti-bribery.”
· “We are hoping to find a solution that can assist us with supply chain finance.”
· “We want improved supplier relationships.”
· …And so forth.
A fairly standard question is, “How many suppliers do you have?” And a fairly standard answer is, “We don’t really know.”
There in lies the dilemma. How can any of these types of initiatives work if there is not a solid understanding of who you are working with, how you are engaged with them, what constitutes the relationship, etc. It is almost similar to trying to build a second story on a house without having the foundation and/or first floor properly secured.
Imagine a risk management program where risk isn’t starting to be assessed from the very beginning of the supplier lifecycle. Imagine trying to implement FCPA / UK Anti-bribery without knowing your third-party relationships, and in what division, geography, and business unit you are leveraging them.
We welcome these types of engagements; however, initiative such as risk, scorecarding, compliance, etc. are building blocks, which rely on the foundation of onboarding, master data management, and governance. Without the foundation, the customer is less likely to succeed, and we would follow suit. (There are always going to be exceptions to this rule, but, as a general point it stands.)
You may then ask, doesn’t everyone have the foundation already? No. A lot has been written about this; therefore, I won’t expand here, but will ask… Is your supplier master clean, consistent, and reflective of all your supplier’s internal relationships?
Ultimately, what really matters to us, is being able to help. If we believe we can’t do that, for whatever reason, then doing business is a bad idea.
As a side note, we are currently working with a number of analyst firms to look into supplier data and how important or unimportant it is in creating the best possible procurement function. Feel free to follow us on LinkedIn or join our newsletter (which goes out every two weeks) to ensure you don’t miss out on the research.
We hope that it will make the supply chain technology landscape look far more straightforward and in doing so help procurement teams everywhere to build highly effective, logical internal processes. The more we can help, the better.