Supplier Discovery Should NOT Be a Kick in the Pants (Part I)

But, as may of you know, it still is.

Even if you just spent a cool seven figures on a brand new S2P system.

Why is this the case? Well, it’s basically because:

  • many vendors assume you already know the vendors you want to strategically source from and
  • the rest think you will be more than thrilled with their private network

But here’s the problem. The entire point of a strategic sourcing project is to identify the best supplier for your organization whether or not you know already know about the supplier and whether or not you have ever done business with the supplier in the past. This means that much of the time the supplier won’t be in your database and some of the time it won’t even be in your provider’s network, no matter how many (millions of) suppliers are in the network.

The reality of the situation is that a S2P provider’s supplier network is built from the suppliers of its customer base, and most of its customers tend to be in a small number of industries, serving specific markets, and sourcing from other specific markets — so unless you are in the same industry, serving the same markets, and sourcing from the same markets, the chances of the new supplier you need being in the network is not nearly as good as you might think it is, even if there are millions of suppliers in the network. (Some of which might not even be active anymore, and some of which might never have been active.) Fifty suppliers for every product or service you don’t need are fifty suppliers that are no good to you.

So you are left in the situation where you have to:

  • scavenge potential suppliers from wherever you can
  • review their product and service offerings to see if they might fit
  • try to find customer recommendations to validate the validity of their offerings
  • qualify the suppliers for participation

And all of this takes time.

Scavenging means you have to go out and look under nooks and crannies just to get a few names. Not just Google searches (because many suppliers aren’t listing their key capabilities in a manner you can easily search among millions of hits. Local associations. Co-opetition. Multiple on-line directories and marketplaces. Even the yellow pages. Not a very efficient method given that we are supposed to be entering the age of cognitive sourcing where tactical work is done for you and all you are left with is the strategic analysis of critical decisions.

But the time-suck doesn’t stop with the scavenge. Google, associations, colleagues, on-line directories, yellow-pages, and your mechanic (because you are desperate, after all) are going to know of suppliers in your industry that might be able to serve you, but they are not going to know your specific needs and the relevance of the recommendations will be anywhere from spot-on to miles away from what you need.

So you will have to review multiple products and service offerings to see if it’s even worth trying to qualify the suppliers for an invitation. This can take anywhere from a half hour (if the offerings are way off) to a few hours (if the offerings are close, but not necessarily close enough).

And then there’s the task of trying to find references that you can trust. Online reviews don’t count, those are easily faked. You need to find customers in your industry or, better yet, co-opetition that will at least certify the validity of their service offerings, if not recommend them.

And then the big time suck starts. You have to invite the suppliers to participate in a qualification RFI where you validate the basic business requirements for all suppliers, the basic industry and regulatory requirements, and the capabilities you require for the products and services you would consider them for. Depending on the industry, geography, and products in question, this could be dozens of pages of responses that need to be validated to meet all the business, regulatory, and product compliance requirements.

This can be weeks of manpower spread over even more weeks to complete — all before you can even start a strategic sourcing event! Ouch!

(And now you understand why we said in Friday’s post thatit’s not the marketplace or the network … it’s the facilitation, and supplier discovery is one core capability that modern platforms are not providing.)