Today’s market is more competitive than ever with renewed competition coming from unfamiliar and sometimes surprising places. Enterprises are being forced to evolve – and to do it quickly. More than ever, success comes from a company’s ability to scale and respond to the market, even as it changes.
Herein lies the opportunity for supplier management. For a long time, strong supplier management has been about control – about ensuring solid relationships and maintaining the value of supplier agreements. Today, strong supplier management needs to be about more than just control. It needs to about taking advantage of partnerships that foster innovation through new technologies and about managing a fluid set of suppliers whose services are constantly in flux. Supplier management must no longer look in the rear-view mirror. It must support a dynamic exchange of information, generate insights into the industry and empower an enterprise to "tune in" to its supplier base.
In fact, supplier management teams – despite often being considered a behind-the-scenes function – have the potential to significantly contribute to the kind of transformation today’s companies are seeking. In essence, they have the potential to drive better services from suppliers. But first, the supplier management function must shift its thinking. Instead of looking backward by simply measuring past performance, it must take a strategic, proactive role and determine specific ways to spur improved supplier performance for the future.
By being a source of intelligence, the supplier management team can collaborate with suppliers, communicating specifically what they should focus on rather than simply – and continuously – demanding more. Changing the way suppliers perceive metrics, so they are thought of as opportunities instead of punishment, essentially rewrites the charter of supplier management. And this starts by digitizing the supplier governance framework. Automation, robotics and cognitive technologies can help an enterprise’s supplier management team make this pivot.
The first step is to automate where possible. Robotic process automation (RPA) can take on many of the manual, tedious and sometimes-costly tasks critical to effective supplier management, including invoice verification and service-level performance monitoring. RPA not only automates tasks related to tracking supplier performance – tasks that are prone to error and take humans hours to complete – but it also can consolidate and organize disparate supplier data for better analysis and greater visibility into the specific strengths and weakness of each supplier. Because RPA software bots are simple to configure and require minimal involvement from IT, they can help a team more easily scale its services to support an ever-changing supplier landscape.
Today’s RPA and cognitive technologies can analyse a tremendous volume of structured data, giving the supplier management team a way to scrutinize performance at a much greater level of detail. With the right information, the team can move from merely tracking service disruptions or incidents to proactively eliminating defects and preventing outages before they occur. Cognitive tools also make it possible to rapidly build cloud-based applications that unlock actionable insights hidden in unstructured data — including proprietary data, as well as public and third-party data. By reading contracts and pulling out each deliverable and obligation commitment – and by recognizing patterns in the data – cognitive tools can help a supplier management team unlock greater insights into why service is delivered the way it is and how to improve it. Even in highly complex environments with multiple suppliers working across multiple regions, enterprises using RPA and cognitive tools can create greater transparency and provide greater value to the enterprise.
ISG’s Digital Supplier Management services help companies transform the way they manage suppliers – so they can shift from looking in the rear-view mirror to looking toward a digital and fast-paced future. Listen in as we explore the exciting new opportunities for supplier management in this recent ISG Smartalk™ Managing Suppliers in the Digital Age: From Complexity to Cohesion.
About the author
Dave develops and delivers all aspects of the services ISG provides to some of the largest consumer products companies in the world, including Kraft, Procter & Gamble, Walgreens and PepsiCo. Dave and his team of consultants create strategies and service delivery plans and provide transition and transformation services and ongoing organizational and operational support. During his tenure at ISG, Dave has been involved in several large information technology assessments and sourcing transactions that have resulted in efficient restructurings, lower IT costs and improved service quality.