This week we’re revisiting posts from ten years ago to demonstrate that, to date, the more things change in Procurement, the more they have, unfortunately, stayed essentially the same.
Ten years ago we published a post on what you can’t afford not to know about your suppliers that summarized some key insights from Jim Lawton (who was VP of Marketing at Open Ratings until its acquisition by D&B, where he became SVP and General Manager of Supply Management Solutions).
Jim, who noted that global supplier insight can become as indispensable to sourcing and supply management as a stage is to an actor, also noted that in order to acquire this insight, an organization has to focus on:
- supplier performance and quality management,
- supply risk management, and
- supplier content and connectivity
And nothing has changed. Any organization that wants to understand total landed cost from global markets and with predictability still needs these capabilities today. Considering that the the final cost of any purchased product is ultimately dependent on the supplier and its ability to delivery a product to spec on time and on budget with minimal defects, supplier performance management is as critical today as it was a decade ago.
Similarly, considering that a single disruption can wipe out the entire identified and negotiated savings on a category (as the result of a six week disruption), supply risk management still takes center stage. (This goes double when the chance of an organization not experience a disruption is 15% or less for any 12 month period.)
Finally, without an understanding of supplier policies, practices, and the providers your suppliers employ, you’ll never know whether or not they are adhering to your corporate social responsibility standards, whether or not they are implementing six sigma and other best practices to ensure quality and keep defects down, and whether or not they are buying from, or subcontracting component development to, third parties that don’t adhere to your quality, responsibility, or ethical standards.
Supplier Intelligence is as important now as it was then, and, most importantly, many organizations don’t have the depth of intelligence they should have, as evidenced on the relative lack of uptake of modern Supplier Relationship Management solutions.