19 May 15

Moving supplier risk & compliance process online: what to consider?

Paper_FilesYour organisation may already be collecting supplier information offline, for example through a spreadsheet or survey, so what are the key benefits of moving this activity online and what should you consider before doing so?

What are the main benefits of moving to an online process?

• Instant global scalability, enabling 100% supplier coverage
• Easy visibility of supplier compliance and risk
• Save time and cost associated with collection and management of large quantities of information
• Enable detailed analysis to ensure information is meaningful
• Consolidate all supplier information requirements in one place
• Access supplier information at the touch of a button
• Improve compliance through making process efficient and user friendly for suppliers

Key Considerations when looking for an online solution

There are number of aspects that should be considered when moving your supplier management or due diligence processes online. Software can improve upon current processes, but it is important that it is not treated as a quick fix.

It is vital that you choose a solution that meets the specific needs of your organisation, and that it is then also implemented in a holistic and considered manner. The following five key areas highlight specific areas to focus on when considering the right solution for your organisation’s requirements.

Flexibility of content:

It is important that you are not constrained or dictated to by the solution that you select. Over time, your information requirements will undoubtedly alter or expand. It is therefore essential that you use a system that can accommodate this.

It is natural that if you are new to gathering information from your suppliers that you will want some guidance on what information you should be gathering. However, a narrow template of questions can only go so far in meeting the actual needs of an organisation over time and it is advisable to assume that your requirements will grow with time.

As and when your supplier programme does expand, for example to include additional departments or supplier category / geography specific requirements, you will want to be sure that this can be accommodated seamlessly within the existing setup.

Focus on what matters and how to analyse it:

When starting the process of managing supplier risk and compliance, or even when moving from an offline to an online process, the temptation is to ask too much. By attempting to collect vast volumes of data or to obtain detailed information that you don’t use, or can’t analyse, you are more than likely wasting not only your own time but also your supplier’s time; which can lead to indifference within your organisation and amongst your suppliers.

To get maximum value out of the information gathering process, focus on the information that you know you need and that you are going to use. This should be gathered in a manner, and through a solution, that enables you to analyse the responses efficiently. You’ll experience higher compliance rates when suppliers aren’t burdened with onerous questionnaires that aren’t relevant and often not even reviewed by the buyers.

Not all suppliers are the same:

As your organisation becomes more familiar with engaging suppliers, it is likely that you will want to gather different information from different suppliers, or groups of suppliers. With a large supplier network, there is often a need to categorise suppliers and request different information according to geographic location, supplier risk category or the value of spend with the organisation.

An online solution should easily be able to accommodate this through categorising and labelling suppliers and enabling different questionnaire sets to be served to specific groups of suppliers. This will allow you to more effectively assess risk against relevant supplier profiles. The analysis capability should complement the data gathering and enable detailed grouping and segmenting of the results.

Make supplier compliance easy and efficient:

Ultimately it is your suppliers who will have to engage with and complete information through your chosen solution. Bear in mind that suppliers are dealing with multiple requests for information, so any decision taken to lessen the burden on them will be appreciated.

You should consider how an online solution can enable suppliers to reuse the data that they disclose for other purposes such as sharing it with their other customers, as well as how it can provide a simple single environment for responding to all of your own company’s requests for information.

A solution that is easy to use and beneficial to both your organisation and the supplier’s, will provide a platform for engaging with your suppliers positively on an ongoing basis. The introduction of an online solution should therefore be treated as part of you supplier relationship management, with one of the objectives being to help suppliers disclose information efficiently and easily thereby improving performance over time.

Analytical capability:

Everything covered so far in this article is something that should be considered in relation to your requirements, and may therefore take on different levels of significance for your organisation. However, when collecting large amounts of information from a large number of suppliers, the analytical capability of an online solution should transcend all organisational requirements.

When you consider that you may have hundreds or thousands of suppliers resulting in thousands of answers, you need to make sure that your solution has the capability to make use of this data. At the very least you should be able to automatically score responses in a manner that is meaningful to all of your departments, flag responses in order to easily identify risk areas, warn of expiring documentation and of course manage your suppliers in an efficient and relevant manner.

The case for moving to an online solution and the associated benefits are relatively straightforward but the key to achieving success is in selecting the right solution for your requirements now and in the future that will ensure efficiencies and benefits for both you and your suppliers.

Greenstone enables you to engage your suppliers through its award-winning supply chain sustainability software and support services. SupplierPortal is a supply chain management software solution providing your business with transparency and compliance across your entire supplier network.

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