Industry best practices dictate that, before they deploy supplier portals and other projects, companies must undergo the process of data cleansing and data enrichment because they cannot manage suppliers without clean, quality and up-to-date data.
Supplier company information becomes out of date over time, causing processing errors. Processing delays and rework can result, for example, when the purchasing system has one supplier location address and the accounts payable system has another.
Stopping Bad Data Before It Spreads
Based on our extensive experience in serving the supplier community, we have identified four major causes of poor supplier data: lack of data accuracy and quality, data redundancy, lack of insight into ownership and diversity certification, and inadequate diverse supplier risk identification.
To halt the propagation of bad data across the enterprise, initial clean-and-enrich steps include gathering missing or incomplete data, removing duplicate suppliers, standardizing names and categories, and establishing supplier dependency and global corporate family linkages.
Maximizing the Payoff of Supplier Relationships
To maximize supplier leverage and minimize supplier costs, you must better understand if you are doing business with more than one “related” company in a family tree or corporate structure.
You can achieve significant buying power by identifying these families and leverage your spend for more favorable contract terms. Additionally, you can reduce costs and increase buying power by migrating away from related companies with low spend to families with more spend.
Mitigating Supplier Dependency Risks
Supplier dependency risk also can result when supplier linkages cannot be determined due to lack of parent-child information. Supplier managers must be able to sort out complex vendor organizational hierarchies to determine supplier linkages for all activity at the ultimate corporate parent. This will help mitigate the risks of supply chain disruptions resulting from supplier dependencies, as well as from supplier credit worthiness issues and non-compliance with contract terms and conditions.