In our last post, we “flipped it 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” (because, in the 80s, we knew that Cats Can Fly). This was because, while records have only A and B sides, we know that Supplier Management is not flat and is best described as a multi-surface convex polyhedral with many sides, including a C-side and a D-side.
While Part 16 and Part 17 focussed in on the more “classic” offerings in the SXM space which were very internally focussed, our last post, Part 18, focussed outward on supplier discovery and network management, because supplier management is pointless if the organization does not have the right suppliers. We also pointed out that once you have identified the right suppliers, in addition to managing them, you need to outreach and enable them to do better, so today we move on to the last side of supplier management, appropriately named the D-Side as many buyers still think of the supplier as the dark side of the force, when, in fact, the supply base is just the dark side of the moon, ripe with opportunity for discovery if we’d just make the effort to get out there and explore.
So, in our final attempt to dissect the CORNED QUIP mash, we will dive into Supplier Orchestration (SOM) and Supplier Enablement (SEM) and outline the remaining capabilities you should be looking for in a Supplier Management Solution if these capabilities are important to you (and they should be).
Now, we get that “the suppliers aren’t paying for the solution” and, as a result, most buying organizations (that aren’t forward thinking enough in our view) don’t care enough to pay for supplier-focussed functionality, and that this means that most vendors just aren’t bothering to build these solutions. However, industry leading buying organizations are waking up to the fact that you can’t employ all the best people and thus the organization needs to take advantage of all the intelligence in its supply chain. Similarly, thought leading vendors are working on solutions to enable the supplier to do more, which really isn’t hard to do as they built most of the communication and collaboration mechanisms into classical onboarding and collaboration and project management, and just didn’t bother opening these capabilities up to the supplier in the past. Today, the best vendor platforms are making the functionality ubiquitous between parties, and those are the platforms we think that you should be looking for.
Orchestration Management. (or Onboarding + Multi-Tier/Multi-Supplier capability)
Classical supplier management was designed to support management of, and visibility into, an organization’s first tier suppliers because that was thought to be enough to minimize risk, reduce cost, and ensure smooth sailing on calm seas in the days ahead. For a while, that was enough, but as the pandemic demonstrated more clearly than any event before, not having deep insight into the deeper tiers of the supply chain can result in significant disruptions across the organization’s operations, not just point based disruptions from the odd supplier failure or (increasingly occurring) natural disaster. Thus, newer solutions are supporting multi-tier supplier management through cascading invitations, onboarding, and management by the tier above and visibility down to the source material.
- Multi-Tier Network Linkages
- A key requirement for multi-tier supplier orchestration is labelled bi-directional multi-tier network linkages that allow a buyer to trace their supply chain through a supplier down multiple tiers to the raw material suppliers when needed and monitor all of those producing critical raw materials, and critical components one level up, for potential risk or disruption. This is easier said then done because a buyer should only see the relationships that are supporting their products and services, not the linkages used by their peers, so the connections have to not only indicate who is using who, and for what, but also on behalf of who. Similarly, a tier 1 supplier should not know that it’s tier 2 supplier is also serving/servicing its competitor unless the competitor or tier 2 supplier chooses to make that relationship public, so now we have to consider relationship type, relationship purpose, relationship reason, and relationship visibility. It’s a lot to think through for a software developer, especially if you want to build an uncertainty management solution on top of that and calculate impacts of delays and disruption up the chains if a tier 4 supplier can’t deliver.
- Cascading Onboarding Support
- When a tier 1 supplier is selected to provide one or more products to a buyer, it needs to define the tier 2 suppliers it is using that need to automatically be invited by the platform to onboard to help the supplier maintain insight into its supply base and provide that insight to the buyer. Similarly, when those tier 2 suppliers onboard, they need to define the tier 3 component / material suppliers they are using to provide their products / components to the tier 2 suppliers. And so on.
And when another tier 1 supplier uses the same tier 2 supplier, it needs to be invited to just provide the relevant supply chain view to that new tier 2 supplier, with tier 3 only invited if they are new or providing different products than are already registered in the system. Unless, of course, a tier 2 (or tier 3) supplier chooses to become a customer, then they can manage their entire supply base through the solution (and not just that which supports the organization[s] currently paying for it). Like multi-tier network design and support, this is also a lot to think through for a software developer, especially one that wants to quickly bring a simple app to market as a “MVP” that it can sell for money.
- Multi-Tier Supplier Support
- The platform has to be more than simple visibility to be useful. It has to support messaging, and collaboration, down and up the chain to determine if early warning signals represent potential problems and, if so, allow for collaboration between the tiers to address those potential problems and proactively define solutions. It has to enable relevant supplier management functionality to all tiers of the chain to be truly useful to a buyer trying to manage a particular chain, but do so only for that buyer as the reality is that if no one is paying, the business providing that solution will not be able to stay in business. In other words, it needs to enable most of the core functions, but not provide any non-paying organization with any ability to add suppliers beyond those indicated to support a given chain.
Enablement Management. (+ Engagement)
Orchestration is great, and key to managing not just the supplier but the supply chain, but what’s the point of orchestrating if you’re not going to take it to the next level and enable the suppliers to better serve you. Being able to see where things are, send messages, and get responses is great, especially since it can provide early warning signals of issues that need to be dealt with, but the point of supplier management should be more than reactive issue resolution. Good supplier management should focus on proactive improvement. And, most importantly, that improvement should not just come from the buyer.
- (Supplier-Led) Innovation Support
- As an organization, your goal should be continual improvement both within your four walls and within the four walls of your strategic suppliers. Considering that most of your products and services are sourced, they will not improve if the suppliers do not improve them. Furthermore, given that your resources are finite, how much time will you actually have for innovating and improving the products you source to sell. Very little or none. It’s critical that most of the innovation come from your supply chain (as that’s where most of the manpower, and hopefully brainpower, should be). Moreover, you shouldn’t have to push for it. Your suppliers, when they find opportunities for quality or process improvement, or efficiency improvements, should be free, and even encouraged, to make those suggestions and kick off innovation projects (under your guidance, of course).
There should be full featured support for innovation. Multi-channel synchronous and asynchronous communication. The ability to whiteboard, design at a high level, and store prototype and related files and artifacts from design tools. Put together project plans — with milestones, tasks, and owners — and allow for tracking, change management, and commentary. It should also support tracking of quality data and quality processes as well.
- Sustainability Guidance
- Sustainability is more than a buzzword, it’s a necessity if your organization wants to not only thrive, but even survive. First of all, with regulations consistently popping up everywhere all at once, you need to get ahead of the curve. You can’t wait for a substance ban, a new GHG tax, or a new documentary requirement to pop up before figuring out its impact on your supply chain and what actions you will need from your supply base to ensure compliance. You need to start working on sustainability as soon as you suspect a regulation is coming. But figuring it out on your own with everything coming at you from everywhere all at once is just too much for an average organization to handle. A great enablement solution will not only help you keep tabs on current and potential sustainability requirements, but also give you guidance on how to be more sustainable, regardless of whether a regulation is enacted or not. Over time, sustainability will increase the longevity of your business and decease your costs. The sooner you increase your utilization of renewable energy and resources, and decrease your usage of finite resources, the better off you will financially be.
- Integrated Supply-Centric Portal
- An enablement solution PUTS THE SUPPLIER FIRST. Let’s repeat that for clarity. It PUTS THE SUPPLIER FIRST. The problem with every single supplier management solution on the market is that it was designed for the buyer and the supplier was an afterthought. For most solutions, the supplier interface is poor, limited in terms of available functionality, and definitely not single sign on (even if the supplier is also a client of the vendor — in this case they will have one sign-on where they can see all their suppliers, but still have to access a different view for each buyer they serve).
If the goal is to engage with the supplier to help them help you, the platform needs to not only enable the supplier to do that, but be a platform the supplier wants to use. A platform where they have to login to 20 different views to support 20 different buyers is NOT one they want to use. A platform that limits their ability to interact with you; denies them access the same features and capabilities in terms of creation, collaboration, and project management; doesn’t allow them to manage their teams and their workflows on their own; that doesn’t adapt to how they work is NOT only one that they don’t want to use, but also one that does NOT enable them.
The Supplier Enablement Platform should be so good that not only does every supplier want to buy it to manage their full supply base as a buyer, but one that they tell buyers without a good supplier-based supply chain management solution to look at because it supports them. This is where SXM platforms need to go if they want to be true enablement platforms, and the doctor will tell you that, despite all the marketing, he’s yet to see an engagement or an experience platform that does all this and puts the supplier on equal footing with the buyer across the platform and first for enablement. The first platform to truly do this will change the game, and change it in a way that will ultimately benefit the end buyer in the supply chain the most. (And who cares if the end buyer is paying for it at first, that buyer will reap benefits that will be many times the platform cost as their production costs predictably stabilize, the efficiency improves, their quality increases, and their sales go up as a result.)
This concludes our discussion of the D-side, the dark side, because, unfortunately, most Supplier Management (SXM) vendors still aren’t shining a light here and building the next generation capabilities these platforms truly need. A few are starting, but they have miles to go.
Next up, a partial list of SXM companies to look at in Part 20. (All do SIM to some extent. As for the rest of the CORNED QUIP, you will have to do your homework. None are SCORNEDQUIPM.)