Whether you’re looking for innovation, sourcing components for new products, or diversifying your supply base to improve resilience, you need to check that the potential suppliers you contact are ethical, reliable, and sustainable.
This validation requires extensive supplier intelligence, beyond basic facts such as addresses, unverified claims on websites, and unfiltered noise from news feeds. The problem for most Chief Procurement Officers (CPOs) is that their egocentric approach to acquiring this supplier intelligence is inefficient and unreliable, because:
Supplier portals force an arduous manual process on your supply base. They selfishly ignore the impact on suppliers of having to register on multiple customers’ portals. Large enterprises can force their suppliers to register, but even they can’t ensure that suppliers update their information regularly. Smaller firms struggle to get adequate adoption of their portals.
Enterprise-wide portals are slightly better, but are still overly egocentric. Many organizations have aggregated discrete business unit specific portals into one company-wide single face to suppliers. For example, the UK government’s supplier registration service collects information on behalf of 6,000 different buying departments. However, it’s still buyer-centric, forcing firms to input data into forms that buyers could have found from publicly available sources had they been less lazy and selfish. “Tell me once” is better than “tell me every time you respond to an RFP”.
Marketplaces enable intelligence gathering, but refuse to collaborate. Customers and suppliers benefit if they join a community that enables suppliers to inform many customers at once. The best marketplaces focus on a few industries and/or regions so they can deliver the critical mass of customers that encourages suppliers to join, and vice versa. Unfortunately, marketplaces have held back their industries by refusing to collaborate with each other. Vendors such as Avetta, Elemica, Hellios, and Sedex would attract far more suppliers if they also published members’ updates to non-clients.
Business networks use their scale as a lever, but don’t vet, curate, or vouch for suppliers. Leading providers, such as Coupa and SAP, have managed to give access to large quantities of suppliers. However, they have not solved the puzzle of quality assurance yet, especially with regards to reliability or legality. Their efforts to verify suppliers’ credentials and remove unsuitable ones have been limited so far. For example, feedback about the quality of a supplier cannot be submitted within the network.
To address this supplier intelligence gathering challenge, procurement leaders should ditch their egocentric approach. We need to shift from “tell me every time you respond to an RFX” beyond “tell me once” to “tell everyone at once”. Suppliers should be able to choose where they publish important information and who they get to certify attributes such as quality, safety, reliability, and sustainability.
Your supplier intelligence solution should be able to gather everything it needs from the various sources, including suppliers’ websites, information providers such as D&B, validating services such as Ecovadis, and business networks such as Coupa. Making information sharing easier for suppliers will benefit everyone by making ESG improvements easier for everyone.
The technology already exists to support this open, interconnected model with products such as the Scoutbee Intelligence Platform. Buyers’ egocentric myopia is the main obstacle. Suppliers would be happier to pay to have their information validated and published if more large organizations accepted updates this way, rather than via their “tell me” portals. Buyers will gravitate towards marketplaces and networks that curate and certify their memberships, causing those that don’t to wither away.