Finding & acting upon supplier relationships:
challenges and opportunities
Procurement is an information game. The more and better-informed teams are, better decisions, faster response time and more efficient the organization will be in delivering value to the business. Identifying relationships across your supplier base and acting upon the identified relationships is an important element which derives many key decisions within the strategic sourcing process (source-to-contract).
Having visibility across the procurement group on current relations across the supplier base has several implications both for the buying organization as well as the suppliers themselves. Knowing different entities of parent supplier firstly signifies the total spend across the organization and might make a difference at supplier segmentation and supplier relation management style depending on the scale. This will have a direct impact on the level of interaction among the companies and can foster higher collaboration and innovation (new products/services) between the buying organization and the parent supplier. Besides, procurement organizations can take advantages to benchmark key factors as quality, cost, and service across all child suppliers and while setting up the expectation from a performance perspective across multiple locations, products/services and business units, optimize contracts (using master supplier agreement) to create sizable saving while staying on top of any changes.
This is not a new challenge but one that hasn’t been tackled properly by most organizations. Current ERP’s are not addressing the real need of procurement teams. And therefore, having a solution that can absorb spend data and create the right insights for procurement can be a great enabler. Next to that business entities are living beings and the snapshot in time won’t hold. Besides there is no one source of information that can reveal all relationships, Merger and Acquisitions (M&A) complexities aside.
We know that we are at the beginning of a new century of connectivity and till we get to that stage of maturity the best enabling solutions should be able to connect across multiple sources of information as well as receive feedback from subject matter experts to refine and mature throughout the time. In Mithra-Ai we are believers of the latter and have developed a flexible solution with an ability to receive different data points and using our proprietary machine learning algorithms matching and creating insights to build the big picture as well as benefiting from subject matter experts to add other business context.
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