A solid supplier data foundation is key to building a sustainable and productive procurement function. Yet many organizations push back on the need to invest in supplier data management solutions.
Internal stakeholders in the C-suite and leaders of other departments are often unable to see the need for digital transformation tools for procurement because they assume the methods of the past work well enough.
It’s up to procurement leaders to share examples of where and how those antiquated processes are failing and explain how breaking data silos and having accurate company-wide supplier and spend data can lead to strategic benefits for all.
The Consequences of Bad Supplier Data
Every procurement professional has experienced at least one mishap due to poor, outdated, or inaccurate data. It’s likely that the negative affects reverberated throughout the organization in the form of missed deadlines, unmet goals, or unplanned spend.
By correlating business failures with the bad data that was the root cause, you can paint a picture of the state of your organization without a supplier data foundation, opening up the conversation of what your future with good supplier data could look like.
The Benefits of a Supplier Data Foundation
Once you’ve emphasized how bad supplier data is holding you back, you can communicate openly with stakeholders about the benefits of accurate data, focusing on how the benefits advantage the stakeholder’s interests.
Decreased Pay to Purchase Cycle Times
Finding, approving, and onboarding suppliers takes time. Updating that information when it changes increases the time from request to receipt of goods. Data accuracy decreases this cycle time by 90%, meaning stakeholders receive the products or services they need much more quickly.
Having a company-wide understanding of where the money is going makes it possible to make strategic spend decisions to negotiate better pricing for every department. Consolidating contracts from multiple departments with a single supplier allows for better contract negotiation and bulk purchase discounts. Complete supplier data also allows for increased competition, resulting in further budget savings.
Meet Diversity and Sustainability Spend Targets
Is your company interested in increasing spend with small and diverse businesses? Are you being tasked with meeting ESG goals? Successfully participating in these types of strategic spend initiatives will only be possible if you’re able to work from accurate supplier data. Many executives are interested in pursuing these types of spend targets, but are unsure of how to tell their teams to execute. Feeding clean supplier data into a tool that lets you report on spend categories is a good place to start.
Having accurate information on which suppliers are inactive or have current or past sanctions allows for informed supplier selection and decreased company risk. This is especially important for businesses that are looking to increase their security standards and tighten up unnecessary spend.
Better Data Means Better Strategy
Framing the need for data accuracy around strategic decision-making, departmental, and company-wide goals breaks down silos and builds opportunities for collaboration across the organization. Clean data is necessary for organizations of the future to stay competitive. But getting clean and complete data requires collaboration and cross-company support, so procurement teams need to be prepared to outline the critical business need for a solid supplier data foundation.