Supplier management software helps manufacturers become more efficient in procurement by reducing costs, improving decision-making, building tighter linkages with internal business units and reducing supply chain risk and potential disruption.
Supplier management software is not a single category of application. Nor is it a single functional business area involving individual stakeholders or stewards for the types of information that supplier management tools provide. This broad set of capabilities and charter make it challenging for procurement and supply chain organizations to analyze and select the best supplier management software for their needs. Here are five issues to consider when choosing among options.
- Understand the diverse assortment of supplier management tools available in the market. Manufacturers need to understand all of the supplier management tools that exist today. These include individual supplier information management (SIM) tools for basic data collection and workflow, supplier performance management, supplier risk management, spend and supplier visibility as well as broader suite components including supplier relationship management (SRM), e-sourcing and contract management.
- Rise to the analytics challenge. Many companies believe that they collect enough supplier information already. While this is not typical, even in the best case, for those organizations that have access to significant amounts of data, it's doubtful that the bulk of the insights contained within it never surface. Organizations need to put in place an analytical/business intelligence (BI) infrastructure to make better decisions based on the supplier management data available to them.
- Integrate supplier management software with transactional and strategic decision tools. Supplier management cannot be a silo. Companies must strive to integrate both transactional and decision- support procurement tools with their supplier management tools. If manufacturers do not have the ability to act on supplier information in the context of routine tasks or important decisions, then they will have wasted all of their supplier management software efforts.
- Identify systems that can create a virtual system of record. In other words, move beyond the ERP vendor "master." The concept of a single supplier system of record is almost laughable given how much supplier information is contained outside of an organization. It's critical that all of the source systems come together to create a true picture of your supplier.
- Don't forget integration with the back-end. Given the number of back-end transactional systems that interface with supplier management tools (shop-floor ERP/MRP for quality and on-time performance information), it is essential for IT leaders to develop a supplier management systems integration strategy that takes into account all of the internal and external source systems that a company will need to pull from and push information into.