In the quest for a consumer grade user experience and the battle for the hearts and minds of your buyers, something is often overlooked. The supplier network is often relegated to a piece of the architecture, an annoying cost on the Bill of Materials that detracts from the sexy front end. Who cares how we send our suppliers their order, as long as we make it easy to place the order, right?
Wrong! Nothing could be further from the truth.
Often associated with ordering stationery or IT consumables, the right supplier network is actually a versatile, powerful medium through which you can collaborate and transact with your goods and services suppliers across all your categories of spend; Direct, Indirect, Contingent Labour & Subcontractors, MRO and T&E.
In Strategic Procurement, whereas today you may use a range of products, tools and processes to publish RFx’s, qualify and onboard suppliers, award business, negotiate contracts, innovate on new products, manage supplier information and performance or manage the materials and services that your suppliers provide, the Supplier Network consolidates all of that into a single place. Your suppliers have a single place to manage you as a customer, and you have a single place to manage them as a supplier, all fully integrated into both your back-end ERP system(s) and operational procurement systems to avoid re-keying and duplication of data.
But, that is only part of the story. Operational Procurement is where it gets really interesting:
MRP is critical to your business and efficient management of your Supply Chain is imperative. Transmitting Purchase Orders for Direct Materials directly from your ERP to your suppliers electronically, where they are automatically captured in your suppliers’ ERP system means they have immediate visibility of your requirements. Capturing the electronic Acknowledgement of your order gives your MRP Planners immediate reassurance that your order is being processed, and the Advanced Shipping Notification automatically feeding into your MRP Schedule ensures the accurate management of your Production Schedules. Planners and Schedulers can focus on planning and scheduling, not chasing suppliers and keying in data.
Moreover, the Contracts against which you are purchasing these Direct goods and materials were automatically created as Outline Agreements or Scheduling Agreements in your ERP at the point the Contract was signed, the price was updated as a Purchase Information Record, and the event you ran to source these was automatically populated with your Bill of Materials and Materials.
Plant Maintenance is vital to keeping your Production Operations moving and minimising downtime, whether it is planned or unplanned, spare parts for machinery or replacement safety equipment. Your Operations personnel can quickly access these from catalogues available via the Supplier Network, directly linked to your Material, Plant and Service Masters and again, transmitting the Purchase Order directly from your ERP to your suppliers electronically means they have immediate visibility of your requirements, and the Acknowledgement and Advanced Shipping Information gives you complete visibility – critical when you need to keep Production running and Operations staff safe.
If you use sub-contractors and/or contingent labour, you need to track their time and deliverables against a Statement of Work so that approval of a timesheet or job completion request automatically acts as a services receipt, enabling you to pay your critical suppliers in a timely manner keep them financially liquid, while keeping tight control over what you are paying for. You can finally move away from large, generic framework orders with laborious, manual reconciliation of invoices, to a fully integrated and audited process where payment authorisation is tightly linked to deliverables based on timesheets or service entry sheets submitted by your suppliers and subcontractors, online. Queries can be handled quickly and efficiently within the payment window and receiving / confirmation can be performed at a granular level to facilitate full or partial payment.
Then, of course, you have indirect spend, which will also be transacted as efficiently as possible over the Supplier Network using state-of-the-art consumer-grade mobile buying interface based on catalogues, forms and contracts, removing the barriers to timely receiving of goods and services, and ensures you are driving compliance to negotiated contracts and preferred suppliers.
In truth, technology is the easy bit, adoption by your users and equally importantly, by your suppliers will turn a technical platform into true procurement transformation. Getting your suppliers to adopt your Supplier Network is not a given – you must own and drive the supplier enablement programme. Your supplier enablement programme must have executive sponsorship. Your suppliers must get the same message from all their touch points with your organisation, whether that is procurement, purchasing or accounts payable, and they will need encouragement and support. It will take time, energy and perseverance from stakeholders across your organisation.
The prize is channeling the vast majority of your procurement and supply chain spend across all categories through your Supplier Network; collaborating and transacting with all your suppliers as efficiently as possible across the entire lifecycle, from registration and qualification to paying the invoice. Your COO will be confident that the supply chain is predictable and under control, your CPO will be confident that suppliers and risk are being managed and negotiated savings are being realised, and your CFO will be confident that you are performing as an industry leader at the lowest cost.
You will have achieved Total Spend Management with a Supplier Network. So, make sure the Supplier Network is at the heart of your procurement & supply chain transformation strategy and choose your Supplier Network carefully. Not all Supplier Networks are equal.
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