We know records only have A and B sides, but Supplier Management is not flat, it’s a multi-surface convex polyhedral and, as such, it has a C-Side. If today’s cat’s could fly, they would be “flippin’ to the ‘C’ side, finished with the ‘B’ side, nothin’ on the ‘A’ side, so tired of the inside, to the ‘C’ side, to the ‘C’ side“. (Confused? Back in the 80s, it was the case that Cats Can Fly.)
As discussed in Part 16 and Part 17, having identified Supplier Management as the next solution after Spend Analysis, we quickly realized that identifying the right solution would be difficult as supplier management has as many aspects on its own as Source-to-Pay (S2P) has. Not only do we have to decide upon which core capabilities in the CORNED QUIP mash are important to our organization, but we have to make sure that the solution covers the baseline requirements for each capability that is important. Our last two posts reviewed the more “classic” offerings in the SXM space which, as you may have noticed, had one thing in common — they were all internally focussed on supporting the buyer with managing the current supplier base in some aspect.
SIM was collecting the information and, hopefully, providing the SMDM foundations for the buyer’s S2P applications. SRM was managing the relationship for the benefit of the buyer, and while it may include collaborative elements, all were meant to serve the buyer, not the supplier, who would only benefit if the benefit served the buyer. SPM was managing the performance of the supplier using buyer-centric metrics. SCM was ensuring the supplier adhered to government, regulatory, and industry regulations. SQM was about ensuring the supplier met your quality requirements. And, finally, SUM was managing your uncertainty and risk as a buyer, supplier be damned.
And that’s why we need a C-side (and a D-side). First of all, as a buyer, you may not have the right suppliers for your organization. And if this is the case, there’s no point managing them when you should be finding, and managing, other, better, suppliers. Secondly, the best supplier performance results from the best plans and processes, which are those processes best suited to the supplier, and those are usually a result of supplier collaboration, interaction, and suggestion. Plus, relationships grow when both sides grow, and classic SRM solutions do not enable the supplier.
Today we dive into the two (2) primary C-side capabilities, Network (SNM) and Discovery (SDM) management, which are key to building a better base of suppliers (and supply).
We’ll admit that the concept of a “Supplier Network” is not new, as many providers have been claiming to have them for well over a decade, although we’d argue that the “networks” they were selling were not true networks as they were closed, still organized entirely for the buyer’s success, and extremely focussed on a single organization, or collective. It was not a “network” in any sense of the word except it was the word chosen by the marketers to massage their message into one that was hopefully mesmerizing to the marketplace. Network is much more than centralizing a bunch of suppliers in a directory and opening it up to an industry. Much more. And, unlike a decade ago, we’re happy to say that some vendors have decent capabilities as well as decent network sizes.
- It’s not a network if it is restricted to the set of suppliers you are currently, actively, doing business with. That’s just a directory. It has to, at least, contain all the suppliers that you could be doing business with (as that’s a key capability for discovery, but note that a network is just a foundation for discovery and not everything you truly need for discovery). It also has to contain all the suppliers your suppliers are doing business with (as that is required for orchestration, a key emerging capability in supplier management). And, most importantly, it must allow new suppliers to join at their pleasure as well as yours. A closed network is not helpful. Plus, you have the foundations for a closed network already in your SIM (even if you don’t realize it).
- True Bi-Directional Graph Support
- The original “networks” were primarily designed for one-way communication from a buyer to a (potential) supplier. But that’s NOT a network. The definition of a network is a group or system of interconnected people or things that allows for bidirectional communications. That means two way communication! A modern network needs to allow any party to communicate with any other party. Suppliers should be able to find potential buyers as well as potential suppliers to them as well as potential partners who can help with services or even production augmentation.
- Extensive Bi-Directional Search Support
- The network needs to support extensive search across all fields of all entities and allow any entity to search for any other entity for any purpose of interest. Buyers should be able find suppliers that (claim to) specialize in carbon steel cladded pressure valves with thickness > 100 mm for heat transfer in hot water based heating systems and suppliers should be able to find buyers in the solar power heating industry. Detailed search by products, capabilities, location, and so on.
- Anonymous Statistics, Classifications, and Reviews
- The network should collect data on how many active relationships there are, how a supplier (and its products) have been classified by buyers, and anonymized reviews on performance and overall ratings. Similarly, it should collect data on how a buyer is classified by suppliers, and anonymized reviews on performance and obligation management of the buyer by (verified) suppliers.
- Verification and Trust Support
- The network must verify that entities on the network are real, and before reviews are allowed to be posted (and then anonymized into overall reviews and ratings), the other party (that must already be verified on the network), must verify the relationship. The network should require relationships to be disclosed when they begin, and must keep reviews completely private until the relationship is disclosed. To ensure honesty and transparency, the platform should limit access to certain functionality (e.g. ratings, project based collaboration, etc.) until a relationship is confirmed. The network functionality, and specifically the verification functionality, must be designed to engender trust and truthfulness on the network. A network that is not trusted will, ultimately, not be used.
Innovation, and even renovation, requires rejuvenation. An organization needs to regularly find new suppliers with new technologies, methodologies, and ideologies in order to constantly improve itself. As a result, discovery is critical. But unless you are part of a supplier network that contains suppliers you aren’t using, you can’t do discovery at all. But, and this is the kicker, no network will contain every supplier as most suppliers won’t join a network until “invited” by the buyer (and then only if the buyer mandates it for the supplier to do business with that buyer), and often the supplier that is missing is the one the buyer needs.
- Location, Product, Capability, and Other Targeted Searches
- Along with deep filter capability. Most networks support basic searches, but if there are hundreds to thousands of suppliers, a buyer can’t review, and thus can’t invite, them all just to find out that most of the suppliers aren’t (currently) right for the organization, so there is a need to do very precise, targeted, searches to uncover the suppliers that are most likely to be the most relevant to the buying organization today. Deep filters and drill downs on a result, and the ability to define similar or like searches, and filters, using existing top-rated suppliers, products, etc.
- Open Search beyond the organization, the community, and the active supply base
- If a network is built up only from the suppliers the buyer, or the vendor’s customers, are actively using, that’s not going to contain all the relevant suppliers out there and the likelihood of discovering new suppliers over time is going to quickly trend to zero. If it’s open, and suppliers can join on their own, that’s better in theory, but the reality is that there are so many “directories” and “networks” out there, the supplier is not going to join unless that supplier wants to do business with one of the buyers who only uses that network. As a result, the likelihood of finding a relevant supplier over time, while not zero, is close to zero. A discovery platform has to be constantly scouring business registries and relevant sites to identify new suppliers, collect the data, use various sources to cross validate the supplier’s existence and, if a beneficial owner or official email can be identified, invite the supplier to proactively register, verify, and enhance their profile WITH a sampling of relevant buyers to them on the discovery platform, where they would be presented as potential suppliers.
- Proactive web-search and web-site monitoring
- Not only should the discovery platform be regularly scouring registries and likely sources for new suppliers, but new website registrations (that might soon be backing registered businesses) and new websites to collect additional relevant data. Also, it’s important to keep the database up to date because you don’t want dead suppliers, which means that registries and websites should be checked at least annually for unused suppliers, and more often for regularly used / contacted suppliers as an out of date website, a significant employee count reduction on LinkedIn, and considerably less activity on social media could indicate the company is winding down or in trouble (well before it is marked as inactive in a registry, which tends to only happen on nonpayment if an official registry, and sometimes doesn’t happen at all in other registries).
- (Anonymized) Statistics, Ratings, and Reviews
- Anonymized statistics, ratings (even if Y/N for a capability), and reviews such as how often the supplier is selected for a shortlist, reviewed, awarded, and rated is very useful criteria for a buyer who is looking for a supplier that might be more appropriate or less risky. Ratings on skills, customer support, etc. would also be quite useful. Detailed reviews on capability, performance, product quality, and capability are also very useful. Buyers need to know more than just that the supplier exists and provides product X and service Y. They need deeper insight when given a bevy of options but no clear way to differentiate between ten potential suppliers that are new to them.
Also, as you may have guessed by now, the best discovery product is built on a network and two of the best uses for a network are discovery and collaboration. The two go hand-in-hand, because, frankly, the C-Side supports Collaboration.
But we’re not done yet! Come back for Part 19 where we flip it to the D-Side!