Why a Synchronized SIM Is a Successful Sourcing Substructure
Supplier Information is old hat in the Sourcing world, having been around since Aravo burst onto the scene in 2000 making it a thing. Every serious Sourcing, Procurement, or Supply Management department has a solution to manage supplier information. Probably more than one system as supplier information is in the ERP, the AP, the eProcurement and a few other systems, as well. But is this supplier information management? No, it's not. Supplier Information Management is about managing the information, and that typically requires centralizing it in one solution, and that's why Aravo made it big in the early times. Without centralizing information, it's hard to get a clear picture of a supplier, which is more than just the view that a buyer of one category typically sees. It's the full financial picture, the full category picture, the full environmental picture, the full corporate social responsibility picture, and so on. And you can't see that without everything being in one system.And while companies like Aravo and Hiperos made their name with this sort of functionality last decade, is this enough? Is this old-school SIM really enough? You've probably figured out the answer by now, and that answer is no. There are multiple problems with this old-school Approach.
Supplier Data Currency, Accuracy, and Completeness
First of all, how current is the information in the system?
These systems were built to pull data in, but if some of the data from ERP or AP systems is only being imported weekly, or even monthly, it's not very current. Moreover, if some of the risk metrics from third parties are only updated quarterly, or even yearly, because the third party doesn't have a compatible API and its manual updates (or the organization only subscribes to quarterly or yearly updates), that's not always current enough to make good decisions.
Secondly, how accurate is the data?
Most of these early systems were built to pull data in, not push it out, and definitely not built to act as a master data store. Often, when information is pulled in, if it's not marked as key identifier information, the information overwrites what is there. So, if two systems have two different addresses for a supplier, the address in your SIM is the last system synced, which is problematic if AP just updated the data, but the ERP, not yet updated, syncs a few hours later.
Third, how complete is the data?
Each system only needs, and only maintains, a subset of data. The AP system is concerned primarily with unique identifying information, banking/payment information, and amounts due. The ERP system is concerned with products/services offered, and inventory. The Sourcing system is concerned with costs and key factors in the decision. But depending on which systems you use, there may not be very much in the way of environmental / CSR data on key products and categories, risk data, balanced scorecards, etc. Just because you purchased a system to centralize that data doesn't mean the data is complete. That's why many vendors upgraded to SPM (Supplier Performance Management) or SRM (Supplier Relationship Management) capabilities or added in compliance and risk capabilities.
Why You Need Modern Supplier Information Management Software
This is the first reason you need a modern, synchronized, supplier information management platform. A platform built to act as the master data store under a Source to Pay (S2P) system and manage the supplier data coming in, and, where the other system (owner)s permit, the data going out. Such a system can ensure currency, accuracy (as rules can be put in place to ensure there are no overwrites without approvals, that data formats are valid, etc.), and completeness (as a user can define what the full picture is for a supplier and can alert a buyer if that full picture is incomplete).
But this is not the only, or most important, reason that you need a modern, synchronized SIM platform. The second reason, which is much more critical, is that
you can't make good sourcing decisions without a complete, accurate, up to date overview of a supplier.
It's important to know how a supplier has been performing across the board before awarding a 2-year, $100M contract, to that supplier. Maybe your past experience with the incumbent is that they have a 99% quality metric and a 90% on-time delivery for your MRO widget, which is more than sufficient as you tend to buy two to three weeks’ worth at a time to optimize total cost (with shipping and inventory costs taken into account), but that might not be the whole story.
The supplier might also be the organization's main supplier of sprockets for new product production, and it could be their quality on sprockets has dropped to 95% with a 75% on time delivery. This could be an early indicator of distress either in their production capability or their finances.
For example, the supplier's primary production facility might have just experienced an earthquake and been taken offline for six months, pushing them to a secondary facility with older technology, less experienced people, and unreliable transportation partners. While they may still be financially viable, and a good long-term partner, the organization might want to find a different supplier for the short term.
Alternatively, the supplier might be in financial distress, might have laid off key people (with respect to your support) and, as a result, might be on a spiral to bankruptcy. But without a 360-degree view, you'll never know.
Download Synertrade and Buyers Meeting Point White Paper: Boosting Supplier Performance with 360° Information
That's why you need a synchronized supplier information management platform underlying your Source to Pay suite end-to-end, because it's not just sourcing where you need to be fully aware of a supplier's situation.
Before you cut a purchase order, you need to know if the supplier is still roughly in the same shape it was when you cut the contract.
Before you send a payment, you want to know the supplier is not in bankruptcy and the money will be used to keep the operation running.
Before you even invite the supplier to the table, you want to make sure that the supplier is not violating any mandatory regulatory policies in the countries you do business, or any ethics policies you publicly release.
You need constant access to 360-degree profile data. Unless you have a synchronized SIM platform underlying your S2P platform, (or tightly integrated with), you won't have this visibility ... and you won't always make the right decision. So, when you are selecting, or upgrading, your Source to Pay software, make sure a modern, synchronized, SIM platform is at the core.