In the past, Supplier Information Management (SIM) systems have focused on, well, managing supplier information. They kept everything in one place and made supplier data available to those who needed it. But that’s essentially where it ended. And that old SIM method is no longer enough.
Sourcing is increasingly complex, forced to satisfy a growing number of regulations and strict compliance requirements, in addition to constant directives from executives to trim waste wherever possible. As a recent Spend Matters™ paper points out (you can download it for free here), the problem with SIM platforms is that they’re often disconnected from the overall sourcing process. They take an exclusively data-management approach that overlooks crucial analysis factors, which can heavily impact an enterprise’s bottom line.
A best-of-breed SIM platform goes deeper than simple data management. It recognizes that supplier information doesn’t exist in a vacuum, but rather within a complex, dynamic, continual assessment of value and risk. It can scrutinize source cycle time efficiency, track supplier performance, ensure the best match between sourcing requirements and a supplier’s capabilities, assess contract compliance, identify a supplier’s risk factors, and integrate all that information with existing applications for maximum visibility. Tools such as SmartSource® Cloud now offer business intelligence tools that integrate SIM and sourcing data insights in the form of analytics that help procurement teams mitigate risk and make better business decisions based on the whole picture rather than individual pieces of the puzzle.
Recently, client Greg Tennyson praised our SIM tool because it enables his team to clearly identify the impact of various suppliers on his company’s budget. This, in turn, promotes collaboration throughout the organization, as buyers access and present well-informed buying strategies that benefit their organization’s efficiency and budget goals.
And it’s not just about budget. For example, a good SIM platform provides in-depth supplier profiles by compiling and comparing data on competing suppliers, exploring background information, and revealing risk factors. Without this information, companies remain vulnerable to supply chain risk. A recent Wall Street Journal article on the lack of executive insight into IT security states:
A survey by supply chain risk mitigation firm Achilles of 65 supply chain executives working in the oil and gas industry found 13% admitted their companies don’t use either their own judgment or a risk model when trying to decide which supplier to hire.
Lack of standardization and insufficient collaboration between buyers and suppliers are increasing pressure and leaving companies open to huge amounts of risk, as they don’t have the tools to qualify and monitor suppliers.
Several common supply chain-related risks include:
- Lack of visibility into managing risk across global, complex and multi-tier supply chains.
- Difficulty protecting brand and corporate reputation.
- Wasted time and unnecessary costs associated with sourcing new suppliers.
- Staying compliant with changing procurement legislation.
- Managing supplier data across multiple systems and locations.
A quality cloud-based SIM platform can help mitigate that risk in the supplier discovery phase of a sourcing event.
A SIM platform combined with strategic sourcing and integrated analytics is not just another background complication. Far from it — it’s a powerful tool that streamlines procurement, deftly trims waste from an organization’s budget, and protects businesses from a variety of risks.
To learn how our cutting-edge SmartSource Cloud strategic sourcing platform can meet your company’s needs, contact us.
* Download this paper to learn about The Promise & Problem with Supplier Information Management (SIM), including the confluence of Supplier Performance Management, Supplier Risk/Compliance Management, and SIM.