Building the Business Case for Supplier Information Management (End-to-End SIM Solution)
In the first of our series of webinars on End-to-end Supplier Information Management Strategy, we join Stephane Sacherer, Associate Director, Global Procure to Pay at Mondelez International, to discuss the first phase of a Supplier Information Management (SIM) project, which is building the business case for Supplier Information Management (End-to-End SIM Solution).
This webinar addresses three key questions:
- How do you articulate the problem that needs to be solved by SIM to the rest of the business?
- How do you obtain the mandate to solve the problem?
- What are the steps for bringing the project to life?
The context: Supplier Central built on HICX foundations
Supplier Central refers to the supplier portal that manages supplier information management and on-boarding for Mondelez, which is provided by HICX. As Stephane describes, the overall aim was “to transform and digitize the way in which we manage Procurement within Mondelez.”
Stephane goes on to explain how Supplier Central is now the point of contact for suppliers. “We want to make sure that we connect, in an easy way, the buyers to the suppliers, so that they can share information but also share dashboards, action plans and information that could be interesting for the supplier,” he adds.
Supplier Central aims to make the partnership between the buyer and the supplier as straightforward as possible, so that the focus can be on adding value.
Challenges faced with no SIM
Stephane explains how, before Supplier Central, data was frequently dispersed across multiple systems and therefore, in order to access full information about a supplier, it was necessary to review different systems and aggregate information.
It was also the case that the process to create a supplier would be different depending on the country and region, which made global level activities such as tracking compliance, risk and fraud less effective.
It also diminishes trust in the data, as Stephane points out, “It meant that there were no guarantees that information is correct.”
Obtaining the mandate to fix the issue
As Stephane explains, it is necessary to view the issue as a multi-stakeholder issue, rather than a system issue – and advises an approach which resonates with multiple departments, such as the buyers, the finance teams, compliance and others.
The common factor, Stephane says, is that all these functions want a solution that allows collaboration much more directly with suppliers, adding, “If I want to send an email to all my suppliers tomorrow, I can do it.”
Articulating the vision of SIM
The most crucial aspect, Stephane explains, is the accuracy of the data, as he continues, “Not having a portal and no central management means that data that is not accurate grows very quickly,” citing examples such as obsolete contact details, bank details, address information and tax numbers. “This all creates workload,” he warns.
On the other hand, accuracy leads to increased efficiency, the key to which Stephane sees as managing the complete end-to-end process. This management is also critical to maintaining control and mitigating risk, as Stephane describes the increasing global nature, not only of suppliers, but also of fraudsters who continue to find new ways of extracting money from organizations. “It is important to build a consistent process, to monitor and to ensure information is up-to-date,” he says.
Additionally, improving the payment cycle remains a key focus and is another area in which data could provide a challenge. As Stephane clarifies, Mondelez is building a partnership of trust and therefore wants to ensure compliance with all payment terms, so the use of data is crucial for reducing the risk of paying late.
Reflecting on partnership, Stephane adds, “Partnering with suppliers to increase innovation; to increase collaboration; and to make sure we work much more closely with them are all very important. What you want, when you do that, is to make sure that the administrative work is not a hurdle to doing that well.” He goes on to describe how a centralized solution, such as Supplier Central in the case of Mondelez, helps to build better connections with suppliers. The result: When buyer and supplier meet, they do not need to discuss mundane topics such as data and dashboards, nor do they need to review action plans, because everything is in the system. “Now the focus can be on how to do things better,” he confirms. The benefit, in Stephane’s view, is that it adds a purpose to these meetings, which is not about managing data but about focusing on a more productive future.
What metrics should be considered?
Stephane talks to four main areas of metrics in the webinar:
- Efficiency gains in processes. As manual workflows become automatic, one parameter to measure is efficiency within an individual process, with the hypothesis that workload related to that will reduce.
- Effectiveness. This metric concerns accuracy of data and asks the question: when data is added, whether that be via an internal process or by the supplier, is it right the first time? One method is to monitor accuracy via validation (such as phone or bank details). Mondelez measures this as a route to improving data effectiveness, so that ‘things are done right’ the first time.
- End-to-end time of a process. For example, creating a supplier. The objective is to reduce the average process time as much as possible. Before Supplier Central, this might take two to three weeks. Stephane affirms that it is now under two weeks – and the ongoing objective is to achieve a time of under one week. He explains that some automation is still needed, but the goal is getting closer.
- Adoption. As Stephane clarifies, if you have a great systems but no-one uses them, then you still have a problem. There are two parameters, used as KPIs, related to this aspect:
- Internal. Once deployed, how many people are using the tool versus sticking to the old process? Where deployed, Stephane affirms that the adoption rate is 100% in those regions.
- External. The supplier must go to the tool, which Stephane sees as being similar to a marketing campaign. They might visit the portal once, but the objective is to have suppliers return again and again. If this is not achieved, the data still becomes obsolete. Ways of encouraging this behavior include: invoice tracking, dashboards, but also small suppliers need to keep data up-to-date. Mondelez therefore has set objectives, such as targets for number of visits per year and number of suppliers logging in to the system. In order to drive this higher, ways are being identified for bringing more value to the portal, and to make it a one stop shop. As Stephane puts it, the supplier needs just “one link to work with Mondelez.”
Additionally, Stephane is working towards monitoring cost to serve. Gaining efficiencies on the workload will be improving cost to serve in terms of managing supplier master data, he clarifies.
What should be in the business case?
Stephane reminds us that, when considering the business case, the ‘as is’ situation is still of utmost importance. “When you want to build a business case, you need to really understand what is going on, because that’s the way you’ll really be able to understand the pain points and build something that will really resonate with your stakeholders,” he advises. “You have to understand that you are solving the right problem to build the business case.”
Stephane places an emphasis on root cause analysis of issues in the organization, adding, “Maybe not all of them, but most of them will be linked to the fact that your master data has some issues.”
He continues: “Look at end-to-end processes. How do I create and then use the master data? Finance, Procurement, Manufacturing – you’re touching lots of big areas that would be highly interested to have a better process in place.”
His advice: Be bold in the expectations.
Defining requirements: Capabilities
In the webinar, Stephane identifies three areas to think about:
- No constraints. When looking for solution and creating the RFP, Stephane explains that the first point for him is to ensure, “that the tool we select will not be a constraint for us.” The solution needs to be expandable and must be able to connect to other systems. It must be open in terms of the interface, with vision to increase in terms of scope. Stephane says that there are many options for solutions that do certain areas well, such as master data, but advises, “When you start to think collaboration, when you start to think one-stop shop for the supplier, when you start to think innovation, then you start to be blocked by some options.” This limits creativity in putting the tool and processes into place as an enabler for Procurement to succeed and bring more value to the company, he continues. A vision that aligns and makes the supplier the center of the solution are his concluding thoughts on this matter.
- User experience. This is another vitally important aspect. As Stephane reminds us, there are many users who will need to connect: Suppliers, requesters, Accounts Payable, your tax team; and compliance team approving a risk. There is no option to provide multiple hours of training to use a new application, so it must be both intuitive and offer a good experience – if it’s good, they will come back, Stephane adds.
- Integration with ERPs. Stephane believes that if you want state of the art, then it will not be an ERP-based solution; however, it is still necessary to connect to them. As pointed out, vendor master data is not standalone data, so it all needs to be connected. The advice is to think about how easy it will be to make changes, integrate, add a new ERP if you have a divestiture, and other such scenarios.
Keeping stakeholders on board
In Stephane’s view, the key to this is to ensure their involvement wherever possible. Develop the business case with them, make them part of the decision, and make sure they understand the benefits.
When developing and building the solution, ensure key stakeholders are also included in design phase. This is especially advisable when you have specific area, or complex back-office area, such as that of tax. Although tax, for example, is a small part of the overall process, there are very specific requirements. As Stephane explains, it is different in various jurisdictions and some countries have far more complex requirements – this means that the tax team in Brazil, for instance, will want access to different data than those in France, or Canada. Including such details will improve results. Stephane describes how AP and compliance were also heavily involved in the detail in the case of this project.
His advice is to bring in all key people that want to participate. In this case, it also involved contacting suppliers to obtain feedback on the tool, with reviews on areas such as ease of setting up and updating data.
In the webinar, Stephane also reminds us that change management is required, which is critical. As he explains, “People like old ways, it’s hard for people to change, so communicate a lot, make it easier for them, send them weekly hints and tips and training when needed. Get people to recognize and adopt the change.”
Stephane says that he has received positive feedback from both teams and suppliers. One of the main indicators for him was how colleagues and partners wanted to use the tool more, with requests such as, ‘can we add this, can we do that, can we connect this?’ Requests have come from Quality, Procurement, and Manufacturing, among others, asking to add functionality. “That has been a game-changer,” he says, adding that the challenge now is prioritization and keeping pace.
Part Two of the ‘End-to-End SIM Strategy’ series moves on to implementation, featuring Craig Penk of Baker Hughes, while Part Three, including guest speakers Adam Hubbard (EDF Energy) and Jerry Grable (BAE Systems), talks to the value that SIM unlocks.