For as long as procurement and sourcing professionals have had a role in business functions, one of their main objectives has been to drive cost savings. While teams have done this in a myriad of ways, how often is the role of supplier data factored into the equation? For all the steps procurement teams have taken to decrease costs while maintaining the quality of their product or service, if they’re using bad supplier data, those efforts are in vain.
The supplier data used within procurement functions, as well as the way that information is gathered and stored, has a huge impact on the efficiency and effectiveness of sourcing tasks. Using bad data for those projects can have severely costly consequences. In this blog, we’ll uncover what the consequences are and how you can leverage smarter supplier data to avoid them.
How does bad data impact procurement costs?
Procurement decisions should be informed by strong supplier data. Without it, your bottom line can suffer. You may be surprised to see just how many functions are poorly affected by the use of bad supplier data.
Time wasted finding suppliers
A recent survey of procurement leaders done by Wakefield Research, confirms that it takes sourcing and procurement executives an average of five weeks to search for a supplier. A reported 56% of procurement executives claim their projects are delayed due to the extended time it takes to find a supplier. Especially as disruptions continue to plague our industry, finding new and diverse suppliers is imperative to ensure supply chain continuity.
As the age-old adage goes, time is money. When procurement teams are spending too much time sourcing suppliers, that is effort that could be reallocated to other impactful projects. Another important point to consider is how easily it can be to delay projects or miss business deadlines because so much time is spent searching for the right supplier to meet requirements.
Failure to meet demand
With the world wracked by inflation and various disruptions, procurement needs to be able to access strong data and quickly source the right suppliers to meet business demands for both stakeholders and consumers. Unfortunately, almost half (43%) of sourcing executives admit they have failed to meet that demand, with 41% having lost out on a business opportunity because they could not find suppliers fast enough with the data they had.
Lack of competition
As 100% of surveyed procurement professionals have been forced to take action in the wake of inflation, 48% are working to find new suppliers to lower costs. If procurement teams are using inaccurate or stale data, they will struggle to identify alternative suppliers that meet their business requirements during sourcing events. Poor visibility into supplier data also impedes competition between incumbent and potentially new suppliers vying for your business, which means you could be missing out on better pricing and more innovative solutions. This can all be successfully done when sourcing decisions are made using good supplier data.
Lack of agility
When disruption or disaster strikes, procurement teams need to be able to access a centralized system of data in order to protect supply chain integrity. Without strong supplier data, organizations are unable to act quickly and find alternative suppliers to offset the effects of production interruptions, shipping delays, and the rising costs of materials and transportation.
Unfortunately, too many procurement and sourcing leaders currently lack a supplier data foundation—even though 2 in 5 (41%) agree that agility is a top benefit of having one.
How do I combat bad data for better cost savings?
From energy to finance to education, cost savings remains a top priority among procurement teams—but the tactics used to achieve those savings need to be supported by better data.
As research has shown, even as procurement professionals work to navigate an ever-changing industry, there is still much room for improvement when it comes to the supplier data being used to make sourcing decisions.
However, there are ways to combat poor data to meet corporate spend goals and achieve overall success within your procurement functions.
Invest in a supplier data foundation
It’s been said time and time again: strategic sourcing decisions need to be based on strong supplier data. By investing in a supplier data foundation, procurement and sourcing teams can create a centralized system of all data that can act as a single source of truth regarding suppliers. Gone will be the days of sifting through spreadsheets or bouncing between supplier portals.
For starters, having a supplier data foundation creates ease and allows team members to improve their efforts sourcing suppliers from one place—and direct their energy and time towards other projects. Having a centralized system that is consistently updated and refreshed also allows organizations to build contingency plans to prepare for disruptions, improve sourcing efforts to increase competition, and drive cost savings through a number of avenues.
Leverage supplier diversity
Regardless of industry, supplier diversity provides a number of benefits for organizations—in fact, 99% of procurement professionals agree that sourcing diverse suppliers is essential to innovate. Already putting this lesson into place to improve cost savings, nearly half (46%) have enhanced their supplier diversity program in response to inflation challenges. What’s more, is that 51% cite greater supplier diversity as the top benefit of a data foundation.
When procurement and sourcing leaders consider the role data plays in driving diversity initiatives, teams can begin to work towards accessing strong diversity data and drive cost savings to:
- Increase competition between existing and new suppliers
- Reduce risk across supplier chains
- Expand business opportunities with alternative suppliers
- Improve innovation
Drive cost savings with smarter supplier data
Don’t fall victim to the consequences of using poor supplier data within your procurement processes. Reach out to our team to learn how TealBook can help you access more dynamic data that unifies your systems, empowers your people, and optimizes your suppliers.
