Category Archives: Supplier Management

SIM? Is It Old News or a Shiny New Pair of Shoes? Part III

As per our last two posts, SIM (Supplier Information Management) is a very mature and stable technology with a large number of software vendors not only providing the tools and best practices to manage supplier life-cycles, but to manage risk, compliance, receivables, and even spend repositories for spend management. And now that every suite vendor has built, or acquired it, the technology is a commodity in the Supply Management Space, and an acquisition of the typical implementation is not likely to get baby that new pair of shoes anytime soon. Especially since most of these platforms use static data models, fixed workflows, and have little support for supply chain visibility beyond tier 1.

More specifically, as per our last post, what is needed is a SIM tool that allows for a truly dynamic data model, adaptable workflow, and a supply chain organization map that could truly bring a new wave of value to a modern Supply Management organization.

And while many of the classic platforms do not have this capability, as well as many of the best-of-breed platforms, some of the newer, and more innovative, platforms are going down this path.

For example, Ivalua, one of the few suite providers built from the ground up on a single code-base, has spent years building a powerful workflow engine that underlies their entire platform and that can be configured to support just about any supplier on-boarding process you can imagine — as well as integrate just about any data source you want to augment the profiles through its end-user data source integration capability.

Then we have SourceMap, which allows you to map your supply chain down to the source raw material, collect data up and down the chain, and dynamically alter it as raw material providers entered the chain or dropped off. And you can visualize it, create risk models that work on propagated data up and down the chain, and even estimate the impact of a delay or disruption.

And, more importantly, we have HICX, the little vendor that could, did, and keeps on trucking. Fully dynamic, adaptable data model that can even be configured into your own workflows and allow you to hang sub-tier supplier information off of supplier nodes. A powerful UI which can be heavily customized, and more innovations coming soon.

In other words, while classic SIM is old-tech and indistinguishable between about two dozen providers, modern SIM is beginning to undergo a resurgence, and when we finally get open networks, centralized, validated data, and community intelligence, we’ll see a new level of value ooze from these solutions.

So choose wisely, and your solution may just grow with you (instead of taking you back to 2009 when we had a feeling things would get better, but didn’t).

SIM? Is It Old News or a Shiny New Pair of Shoes? Part II (Updated)

As per our last post, SIM (Supplier Information Management) is a very mature and stable technology with a large number of software vendors not only providing the tools and best practices to manage supplier life-cycles, but to manage risk, compliance, receivables, and even spend repositories for spend management. And now that every suite vendor has built, or acquired it, the technology is almost a commodity in the Supply Management Space, and an acquisition thereof is not likely to get baby that new pair of shoes anytime soon. Or is it?

As great as they are, most SIM products —- stand alone best-of-breed or integrated suite offerings, have at least one weakness —- and often two. In particular, the data model and the workflow. Just like early spend analysis solutions were often tied to one, rigid, UNSPSC-based data model, most current SIM solutions are also tied to one, rather rigid, data model. In addition, most of those solutions with some SLM (Supplier Lifecycle Management) also have rigid workflows.

This worked well when business processes were predictable and stable and corresponded to products with long life-spans. But the times they-have-a-changed. These days, product life-spans are measured in quarters, and not years, if we are lucky. Associated processes change to not only accommodate the new product demands but to adapt to new technologies and new business requirements. If the workflow can’t adapt, the capability, and overall usefulness, of the tool is limited.

A SIM product that could not only allow a user to define, and redefine, data models as necessary but define, and redefine, workflows as necessary would offer more value than current SIM platforms. And if that product could also maintain full audit trails, which not only track data changes but model and workflow changes, and insure that old records and workflows can still be seamlessly accessed when the data model or workflow changes, then that would be even better.

And if that SIM product went even further and allowed for dynamic organizational, supply base, and user-defined hierarchies, that would be icing on the cake. Supply Chains are not boring because they are not static. They are constantly changing. The supply chain can not only change from product to product, but batch to batch as a primary raw material or part supplier runs out of material, becomes unreachable due to a political or natural disaster, or simply gets greedy and forces the higher tier supplier to find a new source. A good SIM solution will allow the supply chain map to evolve in real-time as the supply chain evolves. Moreover, with acquisitions, mergers, and spin-offs being the normal modus operandi for many businesses, a SIM solution that can easily adapt the organizational data model is also required. Finally, for maximum productivity, a user needs to be able to maintain their own view of the supply chain, back and front, relevant to them. They need to maintain their view of the relevant multi-tier supply base and the relevant hierarchies in their organization that they have to report to and serve.

In other words, a SIM tool that allowed for a truly dynamic data model, workflow, and supply chain organization map could bring a new wave of value to a modern Supply Management organization and the individual with the foresight to acquire such a tool might just get baby a new set of shoes. But is this available? And is it becoming common place?

SIM? Is It Old News or a Shiny New Pair of Shoes? Part I (Updated)

Supplier Information Management, also known as SIM (but which has almost nothing to do with your Subscriber Identity Module card in your cell phone, which is what you probably think of when you hear SIM), is not new. The early leader in this space, Aravo, which boasted the likes of GE and CISCO as clients, was formed in 2000 and followed not only by a slew of companies trying to be best of breed in SIM (including AECSoft, acquired by SciQuest which is now Jaggaer; Hiperos, now owed by Coupa; and Lavante; now owned by PRGX to name a few) but by a slew of suite vendors that began to implement enhanced SIM into their platforms (including Ariba, Iasta [now Determine], and Zycus).

And most of the basic features are now commodity. Try to find a vendor that sells SIM that doesn’t track all headquarter location, financial, core product, service, insurance, and third party risk information associated with a tier 1 supplier. Most of the good vendors also track third party credentials, compliance information against all relevant laws and directives, internal performance metrics and third party ratings, and even integration with third party supplier directories, databases, and or networks.

And the uses are well known.

  • Where are the bulk of my suppliers located?
  • What is the financial health (risk score) of my top 100 suppliers?
  • Are any of my products out of compliance with regulations in one or more countries?
  • Do all of my suppliers have their relevant insurance certificates up to date?
  • Who are my riskiest suppliers?
  • Have all of my suppliers verified their primary contacts in the last six months?

And the more mature companies, to try and maintain an edge, maintain their customer base, and expand into new companies and additional verticals have started to integrate additional, and related, functionality. Aravo evolved into a full Supplier Lifecycle Management solution that balanced compliance, performance, and risk management. Hiperos, before its acquisition by Opus Global and then Coupa, focussed on Third Party Management and on Compliance and Risk Management in particular. For example, their compliance management solutions included code of conduct, diversity management, insurance attestation, social accountability, and sustainability. Lavante focussed on on-boarding and integrating SIM with audit recovery services and advanced to the point where it was acquired by the leading audit recovery services provider, PRGX.

When all is said and done, SIM seems like a very mature space that is very old news. Typically when a technology gets to a point that all the suite vendors are just gobbling up what’s left, there’s nothing new. And betting on it definitely musters the image of an old gambler clutching dice in one hand and his last dollar in the other mumbling “baby needs a new pair of shoes“. But is it a bet you would lose?

Some Screening Questions to ask Prospective Strategic Suppliers

Before you select a strategic supplier, no matter how good their RFI looks, be sure to ask them some point blank questions that are critical to your business and judge the answers they give you (as well as their openness and directness in giving you these answers). Remember, you’re depending on them to serve your strategic customers so you need to be sure they can get it right.

Can we have a copy of your Code of Ethics, CSR Practices, and Privacy Policies?

If the vendor doesn’t have any of these, or won’t give it to you, sound all the sirens and run for the hills. No organization can afford a publicity disaster these days, and a supplier without good ethics (that it is willing to follow), good social responsibility (that it is willing to enforce), and good privacy (that enable it to comply with legislation like GDPR) is YOUR publicity disaster waiting to happen — and we all know what that does to your brand value!

Can you provide 3rd party proof that you live up to it?

It’s one thing to say you have an ethics/CSR/privacy policy, it’s another to follow it — and another yet to have true third party proof that you do. Make sure the vendor has certified CSR and Privacy ratings from trusted, true, third parties (and not from a small consortium of vendors that fund the certification agency) and can point to at least one situation where it terminated a business relationship with a client or supplier that was unwilling to operate in an acceptable, ethical, fashion.

Can we have a copy of your Quality Assurance Process?

If the vendor doesn’t have one, or won’t give it to you, then you need to ask yourself what kind of quality you can expect. (The answer is obvious: low!) Note that you may need a document for each distinct type of product you purchase.

What certifications do you have with regards to your Quality Assurance Process? ISO? ASQ? etc.

If the vendor doesn’t have any certifications, how much faith can you put into the process the vendor is using?

Can you provide references from current AND former clients who did business with you for at least 2 years?

Just like your customers ask you for references, if this supplier is going to be strategic, you need its references. And remember that you don’t want references who have been with the vendor less than a year because the blush is still on the rose and they will be full of peace and love for the vendor. You need a real review from an experienced customer who can tell you what’s good and not so good. No vendor is perfect, and if the not so good is not relevant to your business, then their imperfection is irrelevant. Plus, if customers’ left, why? Was it due to a change in business? Or poor performance? If the customer left for due to a change in business, and they still have a good reference for the former supplier, then that speaks volumes. If the customer left due to continuously poor performance, that also speaks volumes.

What is your dispute resolution process?

Face it, at some point, something is going to go wrong. Sh!t happens. How do they deal with it? And is it a process that you can deal with?

Do you understand our business? Explain!

If the supplier has never supplied a customer in your vertical, and you have special needs, this could be an issue. It could also be an issue if they have never supplied a customer with special needs in your vertical or you have considerably different requirements than the average company in your vertical. Make sure the vendor has a good understanding of who you are as a company by asking this open ended question.

Who are your top competitors? Why are you better for us?

Everyone has competitors. If they don’t, then they are misguided or selling a product or service no one needs. There are no Blue Oceans any more, just open oceans that are only sparsely sailed (by a few companies who are eager explorers). Make sure they give you a few real competitors as well as a good reason as to why they are better, as this will serve to not only enforce their answer to the previous question (and let you know if they really understand your business) but let you know that they have attempted to be honest in their assessment.

Is this everything you need to ask to make sure the supplier can be a strategic partner? No. But it’s a good start!

Supplier Solutions – All About the Space … (Repost)

… of Supplier Enablement. In our recent post about Supplier Networks, we discussed the value wasn’t what the provider typically promoted, but the fact that it greatly decreased the effort required by the supplier to do business. It enabled them to be efficient, whereas most sourcing and procurement applications just suck their time.

So if you are going to buy a supplier management solution, then it better be one that truly, truly, truly enables suppliers. So what does this mean?

Find a solution that focuses suppliers on missing, outlier, and information that can’t be confirmed.

Many solutions just send out regular “please review and correct” alerts and call that supplier information management. But information management isn’t about reminders and checking boxes, it’s about finding issues and fixing them. A good solution identifies missing information, information that is outlier from norms (i.e. an insurance certificate is usually only 1 year, but the supplier entered 10), and information that can’t be confirmed (such as third party audits from organizations that can’t be found in government registries).

Find a solution that makes integration with supplier’s systems (MRP, CRM, order management, etc.) easy.

Suppliers need to quickly get POs out of your portal and into their order management, MRP, ERP, accounts receivable, etc. system for which your vendor will likely not have an out-of-the-box integration solution that you are able to implement on behalf of your supplier. So make sure the solution has a well-defined API that makes it easy for the supplier to integrate their systems if they want to and well defined file formats that will allow them to export orders, etc. from your system and import shipping notices, invoices, etc. from theirs.

Find a solution that includes cash forecasting capability for the supplier based on your early payment discounting schedule.

Face it. A supplier isn’t going to go for your early payment discount program just because you say it’s a good idea — they need to run their own numbers and realize that 2% is less than they are paying in interest, etc. Give them an easy to use calculator, especially since their Procurement or AR guys are likely NOT as financially adept as your financial modellers.

In other words, if you want a true supplier solution, find one that truly, truly, truly enables the supplier. Not just you.