Choosing The Best Supplier Information Management Solution For Your Organization
Table of Contents
As part of digital transformation initiatives in Procurement, one area in scope is Supplier Information Management (SIM).
What is Supplier Information Management?
Supplier Information Management describes a framework or governance structure for collecting and validating all data relating to onboarding suppliers and maintaining that data during the partnership with the supplier and further for future reference.
This includes data relating to any aspect of the relationship, including:
- Credentialing
- Transactional information
- Risk and performance data
- Regulatory information and certificates
Each of these is combined with analytics within those respective areas.
What are the benefits of a Supplier Information Management solution?
Supplier information management provides numerous advantages for procurement teams:
Data consolidation
Organizations can avoid data errors and duplication in supplier data and ensure the data is consistent across the business. This streamlines supplier management across the enterprise and ensures that key stakeholders are fully aligned.
Critical data is captured
SIM empowers procurement teams by allowing them to capture the highest quality data on their suppliers. This data includes metrics related to risks and the supplier’s capabilities. It is essential for procurement teams when evaluating and choosing suppliers to work with.
Tasks can be automated
Supplier Information Management solutions automate essential tasks, including sending notifications to suppliers and ensuring that important documents are updated. It is also possible to automate certain compliance requirements, such as ensuring that accreditations are updated.
This also has the additional benefit of helping organizations reduce administrative costs within the business.
How can enterprises deploy Supplier Information Management?
Enterprises looking to deploy a Supplier Information Management solution have several options, each with advantages and disadvantages.
Organizations often choose a route that is incompatible with their aims. This can lead to significant delays and wasted investment due to some of the disadvantages of the approach taken.
The following evaluation for deployment of Supplier Information Management considers the four main options available to organizations and includes an analysis of the advantages and disadvantages of each approach.
The approaches include:
- Using existing P2P/S2P suites with modular Supplier Information Management solutions.
- Using a multi-domain MDM (Master Data Management) solution
- Building your own system
- Using a dedicated Supplier Information Management solution
Use existing P2P/S2P suites with modular Supplier Information Management
Perhaps inevitably, organizations that have invested heavily in procure-to-pay (P2P) or source-to-pay (S2P) solutions want these solutions to do more to help with the underlying issues facing procurement teams and the business buyers that they support.
What are the advantages?
- Aligns with a ‘vendor consolidation’ IT strategy by leveraging existing investment in P2P or S2P software.
- Connected to the above, this makes the business case easier as it can piggyback off a larger P2P initiative rather than requiring its own separate business case.
- Access to supplier networks means suppliers may not have to provide information multiple times for different customers. However, this only applies if suppliers are prepared to become part of a network and only if the information is of good enough quality for the buying enterprise.
What are the disadvantages?
- Suites are not designed for the wide variety of supplier base information
- They facilitate transactions but are not intended to create master vendor records. Ask yourself: “Are you onboarding a supplier to your procurement suite, or are you onboarding a supplier to the enterprise?“
- Obtaining a single version of the truth is difficult:
- Direct and indirect suppliers are rarely managed in the same suite
- Suites in enterprises have grown organically over time or through acquisitions, which means they contain multiple vendor master records and, therefore, no single version of truth.
- Requires investment in middleware for integration.
- High integration failure rates across systems means manual intervention is required, decreasing automation and driving up operational costs and TCO.
- Automation is limited to use cases within each suite. Automating processes across suites is difficult.
- Supplier self-service is limited to onboarding with little provision for ongoing data management and lifecycle capabilities.
For more information, please see our comprehensive whitepaper: Risks of Using P2P for SIM.
Use a multi-domain Master Data Management (MDM) solution
Multi-domain MDM solutions provide a platform for capturing all master data records from different sources and applications and can consolidate data into a single, centralized location.
What are the advantages?
- Centralization of data into a single location outside of transactional systems
- Allows for good data governance and control/maintenance of inputted data
- A single, consistent, authoritative version of the truth for core data is achievable. It provides the ability to consolidate and clean data.
- Helps to improve data quality across core data elements
- Offers a high degree of internal workflow capabilities and flexibility for data modeling
- Strong technical integration capabilities. Data can be made available across multiple systems and can be used for BI projects.
What are the disadvantages?
- In many cases, you still need multiple multi-domain MDMs to achieve all functionalities required.
- It is an IT-led solution to a data problem and, as such, tends to have a narrow focus that only sometimes considers broader business use cases for the data.
- It runs counter to data democratization, as data ownership should sit with those who understand it.
- Domain expertise is still required to fully realize the benefits of data integration and make them available to end users.
- There often needs to be a supplier portal; the solution is internally focused. This means there needs to be a workflow to allow for collaboration with the suppliers. A solution is buying a workflow tool to overlay on the MDM platform.
- While offering solid technical integration capabilities, generic MDM solutions need a more detailed context of integrating supplier data in the real world, particularly with the ERP(s). While theoretically possible, this is a significant driver of cost in practice.
For more information, please see the article: Multi-domain Master Data Management Won’t Fix Your Data Problems.
Building your own Supplier Information Management system
Major enterprises have well-established methodologies to help project teams assess their options and weigh up the advantages of buying off-the-shelf packaged software versus having a bespoke solution built, either in-house or by a 3rd party development team.
What are the advantages?
- Potentially offers an entirely bespoke solution tailored to the precise requirements of the enterprise.
- The enterprise is in complete control of the solution.
- Specific use cases can be considered as part of the build.
What are the disadvantages?
- Slow and expensive requirement-gathering and design phases.
- End users know what they do today but are only sometimes familiar with software requirements development, so the scope can frequently change during the build phase.
- There are often difficult rollout and adoption phases. Custom applications don’t always start with the best user experience.
- Escalating project costs. Initial estimates often underestimate the complexity involved.
- The project team must manage and budget hardware, data centers, and redundancy infrastructure costs.
- It becomes a big commitment with high risk. Operations, support, and the need for a roadmap mean constant investment will be needed.
- Security challenges for custom-built software. Often only discovered over time, this can create an additional high risk for organizations handling supplier data.
For more information, please refer to our exclusive free report, Build versus Buy versus Low Code.
Use a dedicated Supplier Information Management (SIM) solution
A data-driven platform evolved from MDM, catering to the needs of the management of supplier data and information.
What are the advantages?
- It is faster to implement and provides quicker time to value due to its alignment with business requirements, such as the need for a supplier onboarding portal and ongoing collaboration with suppliers.
- Domain experts can control data quality.
- Data can be checked and verified at creation, ensuring a golden record for master supplier data.
- It integrates easily with other systems, such as ERP, as part of a Master Data Management (MDM) approach.
- It gives ownership of the data – and more autonomy – to the business unit(s) to drive accurate insights and reports.
- It supports the workflows of domain experts and can be configured to match the bespoke requirements of the enterprise through drag-and-drop low-code customization.
- By combining the four key elements (portal, MDM, workflow, and integration) with domain expertise, dedicated Supplier Information Management offers the fastest route to true automation.
- It provides pre-built access to third-party data sources (or punch-outs), which can be used to validate data.
- Supplier Information Management provides the best return at the lowest cost over the length of the project.
What are the disadvantages?
- Where the IT department has vendor consolidation as a goal, an additional solution for supplier data may run counter to this, and so require its business case.
- It requires broader stakeholder support and cross-functional collaboration (although this collaboration is a good outcome for the enterprise).
For more information, please see the article: Multi-domain Master Data Management Won’t Fix Your Data Problems.
Article updated: January 2024
