Five Keys to Managing Supplier Information

Sept. 12, 2008
Technology can certainly help, but only if you take all the necessary steps.

For manufacturers, getting to know their suppliers is a key part of the business. However, being able to maintain consolidated, companywide records of everything they learn is easier said than done. The reason for this is simple: Data are rarely ever kept in one place, according to Andy Hayler, president and CEO of the Information Difference, an analyst firm focused on data management.

Companies may store supplier information in a number of different systems throughout various divisions in the organization -- whether it's an ERP, CRM or various supply chain systems. Often faced with far too many places to look, companies are regularly challenged to find the most current, accurate and relevant information needed to make the best possible sourcing decisions. So with that in mind, Hayler offers the following steps to help narrow down the search.

1. Locate your data. It might seem overly simplistic, but the first step to managing supplier information is to track down how and where data are captured and stored. Since many companies have a number of different systems in place, all maintaining supplier data separately, this can be a rigorous process. Software solutions can help, but in lieu of an enterprise architect, a data analyst may be needed to map out how data flows through the company and track down where all (or most) of your supplier data live.

2. Make a case. While it's nice to keep things tidy, it's not necessarily a reason to spend money on it. So it's important that someone in the company sit down with department heads and make a case for why this data need to be rationalized. Multiple versions of a supplier's information could result in incorrect deliveries -- or keep you from knowing exactly how much you're spending with a particular supplier. For example, several divisions could be dealing with the same supplier under a slightly different name, so you could be missing out on significant discounts. Making a strong business case, whatever it may be, is an important step in getting the transition started in the right direction.

3. Create a process. Once data are located, determine who owns the data. In most organizations, systems are owned by several different divisions throughout the company. These disconnects make it all the more important to put a process in place to allow each group to be aware of changes and be able to discuss them. An important step -- and one that's often overlooked -- is to form an internal data governance group dedicated to supplier data. By having an interface that represents all system owners, problems can be dealt with by agreeing on common data formats. That means when one system updates information or adds a supplier, everyone knows how it will be entered into the rest.

4. Evaluate your technology needs. Once you have completed the first three steps, then you can start looking at technology solutions. First, though, you need to evaluate the scope of what you want to accomplish. Is the goal to consolidate all supplier data for the entire enterprise and every subsidiary, or only certain global suppliers? Reorganizing supplier data can be a big job, so there should be some sort of prioritization as to which suppliers need to be managed globally -- and which do not. Some companies start small, focusing on one region of the world, or across one subset of the company, that can achieve the most immediate results and give them the biggest bang for their buck.

5. Select the right technology. When selecting a technology to manage your supplier information, each vendor will have its own way to bring different forms of data together in a common view. The data may be stored and maintained separately in another software and fed to the other systems, or the existing systems might maintain their own copies and a linkage will be built in so changes are propagated through the enterprise. Every vendor will have a different approach, and there are pros and cons to each.

According to Hayler, implementing a new technology can certainly be an important step for companies to improve how they manage supplier information, but he warns them not to jump ahead without going through the other steps first. "A new technology is not going to solve all of your problems," he says. "Unless you engage the business as to why you need to fix this problem, and put in a process to enable them to come to a constructive way to resolve differences, all you're going to end up with is yet another version of the same supplier data."

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