Firms can leverage technology for improved supplier management

By Strategic Sourceror, February 21, 2014.

Firms can leverage technology for improved supplier management
As global sourcing continues to become the rule rather than the exception, supplier networks are growing increasingly difficult to manage. Many companies’ sourcing partners are in a variety of different countries, each with distinct laws regarding manufacturing processes, workplace ethics and sustainability. Even enterprises with plenty of resources are finding supplier management difficult in this environment.Meanwhile, the contemporary consumer has grown more informed and globally aware than ever. Companies can’t afford to sweep the details of supplier practices under the rug and assume customers won’t do the research on their own. Brands need to manage their overseas partners as closely and proactively as possible, regardless of the effort and expense involved – failing to do so might result in lost business.

The question is: How can firms ensure visibility into their suppliers’ processes while still holding to best practices for agility and spend management?

Looking to technology

Recent years have seen new IT technologies drive enormous improvements in a variety of areas within the enterprise, and these tools stand to benefit supplier management as well. In a blog post for Procurement Leaders, 360° Supplier View founder Declan Kearney discussed the way in which digital resources are promoting visibility between companies and their sourcing partners. He outlined his “ideal principles” for the procurement process this year, and chief among them is the ability to put analytics to effective use.

Kearney insisted that employees need to “analytically literate” in order to utilize these tools to their fullest extent. However, he also insisted that technology must be closely tailored to broader sourcing and business strategies.

“The technology environment is fully aligned with directly related corporate initiatives and supporting systems such as governance, risk and compliance – for example, supplier governance is not treated as a silo of GRC or enterprise risk management in isolation of supplier risk management strategy,” wrote Kearney.

The future of procurement

Kearney’s emphasis on the importance of technological systems in the procurement process is shared by many in the field. However, in a column for Spend Matters, sourcing expert Jason Busch went beyond Kearney’s analysis and suggested that a “systems-driven” approach to e-sourcing and supplier management won’t be sufficient. Rather, he argued, firms need to look ahead to a procurement model that “takes what we’ve learned about supplier management so far and extends it into multiple supply chain tiers.”

Whether Busch’s vision will come to fruition remains to be seen – but in the meantime, companies can feel confident that technology is their best bet for improved supplier visibility.