Top 10 Excuses Put Forth in Avoiding Supplier Lifecycle Management
Appropriately, long gone are the days where procurement and supply chain management are considered “back office”. Today’s leading organizations leverage these talented groups to create and sustain competitive advantages, but it is not without difficulty. Among mergers and acquisitions, global expansion of the supply chain, increased outsourcing, never-ending compliance regulations, and a myriad of disjointed systems, organizations are attempting to accomplish more and more, while utilizing less resources.
As such, savings per employee, whether cost savings, cost avoidance, or cash generation, is an important benchmark that is “front of mind” among all organizations – and most subscribe to Supplier Lifecycle Management as offering the best path towards increased savings.
But many still dodge the inevitable. What are their most common excuses heard?
1. “This is someone else’s responsibility.”
The stakeholders of supplier information span the entire organization: treasury (supply chain finance, etc.); accounts Payable (tax compliance, payments, etc.); sourcing (limit maverick spend, market insight, etc.); IT (data governance, integration, etc.); supply chain (resiliency, performance, etc.); compliance/legal (contracts, regulations, etc.); diversity and more. Net-net: it is everyone’s responsibility.
2. “We are implementing/upgrading/consolidating our ERP system – and it will have to wait.”
Supplier Lifecycle Management does not reside on an island. Instead, it is an integrated solution, which ensures your ERP’s supplier data is accurate, complete, and up to date – and waiting until after an ERP initiative is in place to “bolt on” Supplier Lifecycle Management only increases the pain and cost in reversing any damage done to your information.
3. “We have a handful of other procurement initiatives we must tackle first.”
High performing procurement/supply chain organizations need to be able to leverage all the procurement levers (strategic sourcing, demand management, processing efficiency, and supplier relationship management) to sustain bottom line savings value. Without Supplier Lifecycle Management supporting these initiatives every step of the way, these levers, and associated business processes, diminish in value over time.
4. “There are too many current compliance/regulatory issues to deal with, and we cannot allocate the time for this yet.“
Simply put, how can one get ahead of these issues without the proper supplier information infrastructure?
5. “We do not have any available resources to undertake a project such as this.”
Common value justification models of Supplier Lifecycle Management programs attribute 11% to 24% on resource allocation. With savings measured in millions, and more commonly tens of millions, per year, this is the chicken-egg scenario, where, without Supplier Lifecycle Management in place, resources are rarely available to undertake new, strategic initiatives.
6. “Supplier Lifecycle Management is not in our budget.”
Analysts have attributed the cost-savings of a comprehensive Supplier Lifecycle Management program at over $800 per supplier – and, with a sizable supplier base, this quickly can become a whopping number. Yet, the Total Cost of Ownership does NOT resemble ERP systems, in maintenance, in implementation, or in licensing costs.
7. “We already have too many systems.”
In order to drive procurement efficiencies, a true end-to-end process view, with data flow, is needed – and, as point systems will always have a place within procurement and supply chain, Supplier Lifecycle Management enables collaboration across the various platforms, increasing efficiencies and maximizing value out of existing investments.
8. “Too many of our processes are hard-wired within our ERP system.”
Complex organizations are dependent upon the orchestration of processes spawning global, local and cross-functional organizations, which yield a large number of variations and permutations in the business processes. These processes are often not easy to model within the ERP platform, and require inflexible, costly, and hard-wired solutions. Supplier Lifecycle Management platforms model your organization and processes in a flexible way, enabling you to change as your organization evolves.
9. “We will eventually do this once our ERP provider develops the functionality.”
Please don’t hold your breath. Remember, ERP is great at dealing with the “transaction”, not the “relationship”.
10. “We have to wait and see how this merger/acquisition affects us.”
When is the right time to secure supplier master data governance – especially in light of a merger/acquisition?
If your organization hasn’t yet deployed a comprehensive Supplier Lifecycle Management platform, what’s the real obstacle?
As exemplified by Mitt Romney’s comment, “leadership is about taking responsibility, not making excuses“, leading organizations take initiative and responsibility. And, as highlighted by George Washington Carver’s observation that, “ninety-nine percent of the failures come from people who have a habit of making excuses“, success will be spearheaded through those individuals that lead.
At HICX Solutions, we help our customers significantly reduce the costs and risks associated with managing suppliers – and have a history of aggressively meeting the needs of today’s most complex, global, and evolving purchasing/supply chain organizations. Click here to learn more about how our Supplier Lifecycle Management can bring significant positive impact to your organization, and how you can help lead your organization into the future.