In today’s competitive business world, data is the steam that powers the growth engine of most companies. Despite many changes in the global supply chain after the Covid-19 outbreak, supplier quality management remains the top priority of procurement companies. It is because it determines the workflow of most procurement companies. Structured data is a necessity for it.
Structured data empowers companies with better control over the supply chain. With refined data, companies can predict the outcomes and also formulate the best strategy to deal with the existing challenges. Besides, a supplier database with accurate supplier data also expedites a company’s professional activities. It cuts down the expenses to keep a business organization within its budget.
Accurate supplier data is also important for risk mitigation. Not only does unreliable supplier data multiply risks, but it also shows a company in poor light. Due to an inaccurate view, business organizations remain uncertain about partnering with suppliers. In the long run, it can stall a company’s growth.
Many good reasons highlight the importance of a global supplier database. Read on to find out what they are and how a company can enhance the quality of its supplier data.
Impact of Inaccurate Supplier Data on Business Organizations
The accuracy of supplier data can be useful for procurement firms in many ways. From quality monitoring to compliance, precise supplier data can be quite an asset to firms.
It helps procurement firms determine the quality of supplies coming from a supplier.
Before sending supplies to a procurement firm, a supplier enters into a formal agreement with it. Such an agreement consists of many policies and procedures agreed upon by both parties. With accurate supplier data, a procurement firm can find out whether or not a supplier has followed the agreed policies and procedures.
While accurate supplier data has a positive impact on the quality of supplies and the overall relationship between suppliers and their clients, inaccurate supplier data has a diagonally opposite effect. It negatively impacts the outcomes of a business organization in many ways. These include the ones given below.
- Compromises the integrity of IT Solutions
Given the surging popularity of IT, most companies invest in a reliable IT environment these days. Only a few of them invest in an environment in which data can be exchanged from one point to the other seamlessly. Unfortunately, the majority of them invest in an IT environment in which both data systems and sources do not connect with each other. An integrated IT environment fares better for data sharing or handling than one involving several touch points.
In most cases, an IT environment involving several touch points lacks a system for seamless data transfer from one point to the other. It can make data sharing a major challenge for companies. One of the key aspects that gets affected due to it (the lack of the smooth transfer of data from one point to the other) is the management of supplier data.
Inaccurate supplier data doesn’t allow procurement organizations to monitor the quality of supplies from suppliers. It doesn’t let such firms determine if their supplier partners are following the procedures and processes mentioned in the agreement. In both the short and long term, this can affect the integrity of a business organization. The ones that rely on supplies from suppliers are the ones that suffer the most.
- Negatively impacts ROI
A faulty input of supplier data leads to faulty outcomes. It negatively impacts the metrics for the assessment of certain policies and procedures, which also affects the systems of a company. The combination of both these factors besets the ROI of a firm.
- Impacts the evaluation of the performance of suppliers
Supplier data plays a key role in the performance evaluation of suppliers. Evaluating suppliers’ performance helps business organizations decide which suppliers they should continue with. The lack of precision of supplier data can either stall this process or affect its outcomes.
Why is it important to have a global supplier database in the current scenario?
In the current era of the IT boom, businesses of all sizes rely on organized data for decision-making and other purposes. In a way, the success of a company relates to the availability of organized data. Relying solely on a limited set of suppliers can be risky in today’s competitive business world. So, they look for ways to diversify their supplier base.
That said, having several suppliers at their disposal also leads to the problem of choice. Plus, it may also necessitate dealing with a high volume of data. With a centrally managed system of hygienic supplier data, a company can effectively use the data at its disposal.
Here are some reasons for which companies favor the availability of a global supplier database.
- Single authentic record of supplier data
Too many records in a database can be chaotic for firms, especially those with multiple departments. Sometimes a firm may involve two or more of its departments in the execution of a task. At the time of exchanging records from one department to the other, representatives may edit the data manually as per their understanding. Not only will it create confusion, but it will also lead to multiple records of a supplier.
In most cases, the representatives of different departments name a supplier differently. Oftentimes, it leads to confusion at the time of invoicing.
A systematic data governance system makes way for the availability of accurate and clean supplier records. In both the short and long run, it facilitates smoother business transactions.
- Better adherence to compliance
For operations, companies follow a long list of g guidelines these days. In addition, they also need to comply with SEC, EPA, FDA, and other regulations. When it comes to following the stated guidelines, more than themselves, companies need to ensure that their suppliers comply with them.
Not complying with FDA and other regulations can lead to the debarment of a supplier. Partnering with such a supplier can put a procurement company in a risky situation. This is precisely where the detailed information of a supplier plays a positive role for companies.
Business organizations study supplier data from time to time to decide on continuing their partnership with a supplier. A trustworthy supplier record facilitates companies in ensuring that they partner with only those suppliers who adhere to the stated guidelines. A global supplier record also helps procurement companies to make quick changes to their decisions when regulators issue a new set of guidelines.
- Stronger relations of companies with suppliers
Some business organizations heavily rely on suppliers to achieve their business objectives. Such businesses must review their relations with suppliers from time to time. A strong business relationship creates a win-win situation for both parties. An accurate supplier database can play the role of a catalyst in this regard. It not only furnishes the key details of suppliers but also says a lot about their performance to procurement agencies.
Data governance and relations with suppliers go hand-in-hand in the supply chain. A singular source of credible data enables companies to effectively work with their suppliers. As a result, companies find themselves in a better position to consolidate workflows. Other than performance tracking, such a consolidated source of credible data also proves helpful in monitoring the performance of suppliers.
It saves money and helps companies with a low or tight budget from overspending. From the standpoint of productivity, it drives efficiency in a supply chain. When a company knows that it has a credible set of suppliers, based on the accuracy of their data, it can go ahead and partner with them to build strong business relations.
Automating the global supplier database can resolve various issues in managing supplier data
Today, the availability of a huge chunk of data makes it difficult for companies to analyze them by using manual methods. A company may either have structured or unstructured. In both cases, using the manual method or traditional method for handling them can lead to inefficiencies in the operations of a business organization.
Automation is a great option for companies to efficiently conclude repetitive tasks in data management. Apart from efficiency, this technique is capable of analyzing vast chunks of data in a shorter duration. For businesses, time is money, so, for them, saving time is akin to making a profit.
By creating a supplier portal involving credible supplier data, a company can easily resolve most issues related to its supplier data management. In addition, it can be useful in many other ways, as given below.
- Up-to-date information at the fingertips
The information or details of some suppliers change over time. Updating the current information of such suppliers from time to time is necessary to keep a database relevant. A standardized and pristine supplier data makes it simple and easy for companies to identify their potential suppliers. Plus, such a database also proves to be useful at the time of bidding.
Usually, the database of a company consists of the data of many suppliers. Large-sized companies have a wider database than mid-sized or small businesses. Collecting the up-to-date information from individual suppliers and populating them in a database can take quite a while. A smart way to deal with this challenge is to give suppliers access to a supply portal. This way, suppliers can update their current details. Giving access to a customized supplier form is the best thing a company can do to make things simple and easy for suppliers.
- Choice of suppliers based on a company’s requirements
Companies rely on a set of criteria for choosing suppliers. These criteria vary from one company to the other. Automation can be a powerful tool for vetting potential clients by using a given set of criteria. For a company, the best way to employ automation in choosing potential suppliers is to make certain that newly-registered suppliers fill up a survey form or questionnaire.
In the subsequent stages, the data from the questionnaire or survey form can be used for prequalification sourcing. Routing the survey to appropriate buyers can save both time and hassle for a company. A company can use the duration of time saved due to the easing of workload for other productive purposes.
- Monitoring and reporting
The Covid-19 pandemic has made it crystal clear to companies that they cannot rely too heavily on specific suppliers. Supplier diversity is of paramount importance for backup options in each commodity category in the hour of need. With a supplier portal, a company can get customized reports from time to time. This keeps it informed on whether it is overly reliant on a specific group of suppliers.
- Lesser administrative workload
A supplier portal brings in the advantage of automation which, just like the other aspects, also eases the workload of administrative tasks of companies. Apart from vetting and pre-qualifying suppliers based on their information, a supplier portal also allows sending and receiving key notifications. Such notifications may relate to certificates, certification expiration, and other such categories of administrative tasks.
The beauty of automation through a supplier portal lies in the fact that it performs administrative tasks on its own. By eliminating the need for manual intervention or effort, it relieves a company and its recruiters of the requirement for hiring new employees. Plus, automation also has a higher degree of accuracy. As a result, companies do not need to worry about rechecking the available data all over again.
While there is a long list of reasons, the ones mentioned above strongly justify why it is indispensable. From choosing reliable suppliers to monitoring their performance based on the latest data, a global supplier database can come in handy for a company in many ways.