Supplier Management: Cost Reduction and Compliance are key

August 31, 2015 Ken Klaver

freight audit. controlpay

A new report by The Aberdeen Group, based on the recent “The Value of Strategic Supplier Data Management” survey, reviews how supplier data is used, managed, and leveraged to achieve the best supply chain performance.

The results are based on the input of supply chain and sourcing practitioners and is filled with valuable data about what separates the Leaders from the Followers. 

  

According to Bryan Ball, Vice President and Group Director, Supply Chain and Global Supply Management Practices at Aberdeen Group, the highest ranking business pressures for sourcing, procurement and supplier management teams are:

  1. Cost Reduction and savings (92%)
  2. Increased pressure for regulatory compliance and internal compliance to contracts (45%)

Data management plays an important role for sourcing and procurement. Figure 2 shows the key functional elements that are incorporated into what the Leaders are doing to manage their business compared to the Followers. The first observation is the significant gap in the adoption rate of these core processes compared to the Followers. Secondly, each one of these core processes is dependent on some form of supplier data, whether it’s spend, performance, or a piece of third party related data. For each key element, there is also the determination of data required, along with the timeliness, frequency, and accuracy. Thirdly, lack of valid and timely supplier data can directly affect the process performance for any of these key elements and render them ineffective. 

For effective monitoring and assessment, the supplier information across all internal participants must be captured in order to create a holistic view of the supplier. This means that the spend and performance for each supplier can be pulled across the multiple sources in an organization and aggregated in several ways. Being able to provide accurate spend analysis by vendor and item/service is one of the most valuable benefits provided from a robust supplier data management process. 

What capabilities and technology are used?

According to Aberdeen, many companies have adopted a Master Data Management (MDM) solution to take on the data management challenges including supplier data. 

In order to accomplish their mission, supply chain, sourcing and procurement Leaders understand that effective supplier data management is a core requirement to their success with regards to cost reduction and ensuring regulatory compliance.

However, for many large corporations it is a challenge to efficiently marry transport data from different sources into one single data repository for harmonized reporting purposes. Harmonizing and centralizing the data structure is essential for sourcing and procurement departments in order to analyze supplier performance.

Aberdeen recommends combining in-house data along with a third party risk assessment partner to develop a comprehensive risk assessment view.

3 important Takeaways from this report

"To remain competitive, leaders in supply chain, sourcing and procurement organizations have had to constantly streamline processes and adopt new technologies to stay ahead. To further complicate their challenge is the environment they face when it comes to the underlying data to support these processes. For the majority of midsize (over $250 million) and large companies (over $1 billion), gone are the days when all information resided in one ERP system. Most, if not all are dealing with multiple transaction, planning, and procurement systems across their organization where supplier data exists. " Bryan Ball, Vice President and Group Director, Supply Chain and Global Supply Management Practices at Aberdeen Group

“Even the largest global organizations lack the visibility to all financial, product, shipment, environmental and trading restrictions that exist, for all items in all countries. Keeping up with all compliance issues is a risk issue in itself. In addition to external compliance – internal compliance to contract requirements and audits have increased in complexity due to financial reporting guidelines and regulatory documentation.”

“Supply Chain Leaders are over 30% more likely to have an efficient supplier data management process to accelerate supplier onboarding.”


About Aberdeen

Since 1988, Aberdeen Group has published research that helps businesses worldwide improve their performance. Our analysts derive fact-based, vendor-agnostic insights from a proprietary analytical framework, which identifies Best-in-Class organizations from primary research conducted with industry practitioners. The resulting research content is used by hundreds of thousands of business professionals to drive smarter decision-making and improve business strategy. Aberdeen Group is headquartered in Boston, MA. 

To review the full report, use the following link:  “The Value of Strategic Supplier Data Management” from The Aberdeen Group (free).

About ControlPay - Europe's largest Freight Audit provider

ControlPay was founded in 2002 by a team of European logistics veterans. Our main objective was, and still is today, to support multinationals in their continuous endeavor for control of and insights in freight spend. ControlPay offers a robust service offering of different audit and consultancy solutions focused at process optimization and cost savings.

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