The EBG’s Source-to-Pay Summit took place this month, albeit in a reimagined digital format in light of the ongoing restrictions on social gatherings in Europe. However, its attention remained focused on the theme of operational excellence with strategic effect, covering topics such as digitization, analytics and cross functional collaboration.
Traditionally a Nordic-based event, this year’s virtual incarnation saw the coming together of not only leading Nordic organizations such as Orkla, IKEA, Vestas, Ericsson, Volvo Cars and Scania, but also global heavyweights with headquarters outside the region, such as Siemens, Adidas, Syngenta, Novartis, Lufthansa, GE Healthcare and ABB.
Exceeding expectations – virtually
I was delighted to be invited to host a discussion on a topic close to my heart at the event, namely Supplier Data and Lifecycle Information Management.
Now, I want to level with you… Having spent more than ten years in the advisory and networking space myself, I know firsthand the value of coming together to share, learn and interact with one other. But doing it virtually? I have to admit, I was skeptical and had reasonably low expectations, a preconception that was wide of the mark.
I was positively surprised not only by the volume of attendees but also their engagement in the virtual environment, their willingness to speak up, to share perspectives and ask questions. This made for rich content at a level I did not expect. So, the lesson of the story here is, sometimes it’s nice to have to admit you were wrong..!
How is Supplier Information being fixed?
One of HICX’s key objectives in attending was to test the degree to which the Nordic Source-to-Pay community sees Supplier Information Management (SIM) as a pain point – and to understand the tactics being deployed to fix it.
Unsurprisingly, it was fairly easy to establish that the state of supplier information was generally perceived as poor. This is a consistent global message. The outliers here are enterprises that are on the smaller side, or those that are just starting their procurement maturity journey and have yet to discover the extensive data issues that can arise.
So, while most agreed that the supplier information problem is a major one – and one that needs fixing – there was a diverse set of tactics being deployed to try and fix it. These included:
- Cleaning the data
- Deploying Business Process Outsourcing (BPO) or a shared service model
- Trying to use an all-in-one solution, such as Source-to-Pay solution
- Building a central data lake
- Building an in-house solution
The final bullet point around building in-house solutions is an interesting one – and one we are seeing enjoying something of a renaissance, particularly within some large and mature organizations. But why on earth would any company even consider harking back to the eighties and nineties and developing their own solution when there are so many solutions on the market?
The simple reason is that incumbent solutions are all failing.
Why are incumbent solutions failing to solve the SIM problem?
The short answer is, they are almost always looking for ‘quick wins,’ instead of finding fundamental solutions that will address the issue sustainably and on a long-term basis.
There is an alternative to the incumbent solutions, or building a solution internally (which is not going to be a viable long-term solution either) – and its deployment is being led by a break out group of early innovators, including the likes of Mondelez, Baker Hughes and BAE Systems.
What they have realized over time and from first-hand experience is that, once bad information has entered your organization, it is virtually impossible to clean it up after the event. So, what they have all done is implement a single enterprise-wide supplier portal that provides the only entry point for suppliers (and their data) into their organization, with no exceptions.
‘But hang on’, you might say, ‘we already have several portals operating within our business and we are still far away from fixing the problem. How is another portal the answer?’
It is important to remember that the ‘several’ portals that exist are actually not set up to manage the information lifecycle of your global supply base. Instead their purpose is to collect any supplier information that an ERP or P2P needs in order to fulfill its transactional use case. So it’s a case of several portals only providing, at best, partial answers to the SIM issue.
A single enterprise wide supplier portal
On the other hand, by having a single entry point, enterprises can fully control the information flow into the organization, provided the portal is good at personalizing the user experience – crucially both for internal users and supplier users – and that it can collect exactly the right information that the different transactional systems (such as ERPs/P2Ps) require, so no workarounds are needed.
This portal not only needs to be able to collect the supplier information, but it also needs to be able to manage 100% of the supplier pre-qualification workflows, as well as any update to the information during its lifecycle, plus automatically update other systems as the data changes. It also significantly simplifies the digital roadmap.
It was clear that the journey of the Nordic procurement community mirrors that of wider Europe and indeed the US. The approaches deployed ranged right the way from the more basic approach at one end, to top quartile practice at the other.
Even so, the concept of a Mondelez-style approach, architecting a single solution for Enterprise Supplier Information Management, certainly resonated with the audience here – and for those who shared that they were looking at this topic right now, I would think and hope the discussions have given some fresh, new perspectives.