A centralized Supplier Data Management solution must support five crucial business processes relating to supplier relationships. These processes include: creating, updating, extending, deactivating, and reactivating.
Below we look at the five business processes for an effective supplier master data management solution, including the greater benefits of this approach:
This business process is referred to as supplier or vendor onboarding. It refers to how a business creates a new relationship with a supplier or vendor. If the creation process is new for the enterprise, it will start from scratch. However, if the supplier is doing business with one of the client’s organizations, then it will be a supplier extension process.
The supplier onboarding begins with a certain line of business requesting services or products from a supplier. This could be any personnel or employee from any of the departments – marketing, research, finance, or supply chain. The workflow elements of the supplier onboarding process include the approval of the request, collection of information, assessment of information, business approval, and activation into the target systems.
The above process applies if the vendor does business with any of this enterprise’s affiliates or partners. However, in this case, it technically becomes a supplier’s extension. This process should facilitate extending information and deciding whether or not to use new or existing information.
This is the process of making changes to an existing record. The process of updating an existing supplier could affect central and global data and will need some form of global governance to efficiently achieve it. Having every team (that uses the supplier) approves the supplier’s details isn’t an effective process.
What’s more, there are instances where the supplier’s data is purely local. For example, bank accounts, payment terms, and reconciliation accounts utilized for a particular firm. This data should be managed locally or centrally. Divisional offices must control local data to ensure accessibility and improve operational flexibility.
Changes can be initiated internally or externally by a vendor’s portal in this process. Through time, this process can transcend vendor data management and cover changes to other types of information such as social responsibility, information security, health and safety, and other relevant information.
This process is known as supplier off-boarding and starts when a user decides to deactivate a supplier. There are two main elements captured in this process:
- The subsequent approval
- Updating information to block it off in the relevant P2P and ERP systems.
Deactivating may occur because supplier(s) have been entered more than once. Alternatively, deactivation may occur to suppliers whom a business doesn’t wish to trade with in the future, like suppliers that have ceased trading or declared bankrupt.
Reactivating is the final business process for an effective supplier master data management. It’s the process of reinitializing a relationship with a supplier after a hiatus. There’s a great possibility that a large chunk of information (both supplier and business information) has changed during this time of dormancy. That’s why it’s crucial to ensure that all data and information are valid and up-to-date.
By far, the most important process is supplier onboarding. That is because it’s much easier to start other tasks upfront. For instance, once you have established a supplier contract, assessing risk and compliance is counterproductive. So, it’s advisable to conduct a thorough supplier onboarding to avoid unforeseen risks later down the vendor-relationship line.
Information Captured by the Supplier Master Data Management
Supplier data which is often referred to as vendor data includes vital information such as:
- Details about the point of contact or the contact person or company
- Geographical information or location especially if the supplier has multiple offices in different locations, regions, or countries.
- Services and goods each vendor supplies
- Supplier’s legal information (licensures, standardization marks, etc.)
- Relevant certifications for operation
Recording and securing supplier information and data is a one-time process for avoiding common data quality issues: incompleteness, inaccuracy, invalidities, non-standard entries, and invalidities.
What’s emerging with new data trends is that an effective Supplier Master Data Management plan is critical for maintaining supplier data and avoiding the problems caused by big data.
The supplier master data management solution provides a master cleansing solution for big data, prioritizing information, insights, and critical trends and eliminating junk. With the help of a central master data solution, you can enable your team to be more productive in working with suppliers, instead of wasting their time on often-repeated tasks.
Commonly known as supplier information management, supplier master data management is more than just recording and verifying supplier data. This centralized solution allows businesses to use data to answer hard questions and simplify other areas of the organization through the insight provided.
There’s no doubt that better data leads to improved insight and improved business outcomes. That, in turn, leads to improved decision-making, transparency, and efficiency for customers and suppliers. Big data integrates past sales trends with predictive analytics to provide inventory and supply managers with predictable guides on just how much to expect.
ProcurePort – Your Partner in Supplier Master Data Management Solutions
The insight obtained from big data and the master data management solution helps to cut costs so that the supply chain can order goods and products adequately to stock the shelves without potentially ordering too much or wasting due to over supplies. A Supplier Master Data Management SMDM is improving everything – from reducing the delivery times to bridging the communication gap between vendors and manufacturers.
And now, with ProcurePort, you can know how to go about supplier master data management.