So much of a business’s value flows through the vendor network, highlighting how vital these partners are for any organization. And let’s not forget risk – if a business fails to assess compliance and supply risk, they could be left seriously exposed and their critical supply chain impacted.
The process begins with vendor selection, risk assessment and onboarding. The onboarding process needs to support the requirements of both the organization and the vendor, and it must be easy, efficient and facilitate validation of vendor information to ensure compliance. Simply digitizing manual processes is of low value as the same shortcomings are simply transferred to the digital format. Instead, another approach is needed.
This is where full-scale digitalization plays such an important role in creating value and eliminating risk.
But what is digitalization exactly? According to Gartner, digitalization is “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business”. We can see, immediately, how this concept goes much further than merely replacing manual forms with digital forms, and how it can be used to really boost value and control risk for a business.
To provide more insight into what this means for business, let’s look at a recent case study. We have a multinational commodity trading and mining company with over 9000 vendors in Australia. This client was experiencing difficulty in five key areas:
- Compliance and risk exposure – are all supplier insurances, licenses and other certificates valid and up to date?
- Lack of agility in requesting and extending existing suppliers for optimized delivery time from a new site – all manual.
- Poor data quality and data integrity.
- No self-service capability and no reminder notification for expiry of certificates.
- Lack of mobile decision making to expedite the end-to-end process
The “digitalization” opportunity was to deploy both an internal and an external facing portal, allowing the company to internally initiate onboarding while providing the vendor with an external log-in and the ability to input and attach their details and the mandated certificates. Once the vendor is on-boarded they have access to the benefits of the self-service functionality to maintain their details and currency of their certificates and also view invoices and purchase orders.
Let’s take a more detailed look at the benefits of the vendor portal.
Compliance and Risk Reduction
The self-managed vendor portal improved vendor compliance by 38.4%. This was a win-win for both vendors and for the client, as the vendors were able to maintain their own compliance in accordance with the company’s purchasing policy and regulations.
Specifying vendor service classification (Type of Supply), increased insight into the types of products and services vendors were supplying, and therefore, similarly increased understanding of their relevant certification requirements. This provides agility to changing laws and provides confidence that vendors are also remaining compliant.
New compliance processes can be initiated quickly by adding a “type of supply” to a vendor, which automatically triggers a compliance check process with the vendor. The functionality of push notifications and automatic blocking of non-compliant vendors assisted this large multinational to build transparent and confident vendor relations.
Rapid Vendor Onboarding extension to Supply from a New Supplier Site
Existing vendors are valuable as they are already compliant with a company’s purchasing policy and regulations. It makes good business sense to facilitate the rapid extension and allow existing vendors to supply from their new sites.
This ability allows optimized and fast supply to occur and benefits all parties by sustaining and deepening the vendor and company relationship.
Improving Data Quality and Data Integrity
All key features to obtain and maintain quality data are provided. These include validation of data on entry, duplicate data checks and external checks against public web services.
The internal business logic, rules and policy are also applied to mandate specific information. Task notifications and multi-channel approval allowed the data to be appraised, checked and approved prior to update further improving the data quality.
The portal is designed to provide both review and oversight to reduce the risk of duplicate content and safeguards the ongoing integrity of vendor data.
Self-Service and Automation of Records
Thanks to the external facing component of the portal, the vendors can now self-service to maintain currency of their key details and compliance certificates. Fast and easy compliance means vendors can supply on time supporting critical business operations.
Automated workflow and updates within the portal have made the process smoother and more efficient, with Accounts Payable workload reducing by 28.2%.
Mobile Decision Making
The portal uses pre-existing IQX software that is customized for the client’s needs and incorporates deep SAP process knowledge and best use of SAP and Microsoft technologies.
As part of the end-to-end solution OneList approvals was incorporate to eliminate approval bottlenecks by providing an action list that is universally accessible and quick to use.
What does this mean for decision making and the expediency of the entire process? Managers are now able to make important business decisions faster and more confidently. Managers have access to all the information and any necessary supporting documents to make informed choices as and when required.
Looking Forward: What’s Next for Vendors and Client?
Writing for Supply Chain Quarterly, Paul Schroder and David M. Powell were clear on the issues currently hitting supplier businesses hard. These include products which fail to conform to company or regulatory standards, non-competitive customer service levels and delays, and supply chain risk factors.
By adopting the approach of targeting the five key areas of concern, the client was able to implement a portal which helped vendors to help themselves! Vendors could deal directly with these above supply issues and risks head-on in an effective and proactive way.
The rapid take-up of the portal functionality by suppliers bears evidence, with initial take-up rates of 65% across the 9000 vendors within a few weeks; a strong response to the new digital vendor engagement approach. This makes the portal an attractive asset for both the client and the vendors as all parties benefit from the digitalization of vendor engagement.