Knowing that you're getting the best value and service from the best supplier available requires accurate comparison data—a seemingly simple requirement, but one that even large, established companies struggle with. Accuracy and up-to-date numbers should obviously be a part of your vendor management best practices, but what's the best way to fold them in without needing to reinvent the wheel?
Here are four scalable steps that every business needs to incorporate to clean up their vendor data and save their sanity.
1. Get approval and support within your company.
Before you embark on any clean-up or data restructuring missions, be sure your stakeholders know why vendor data collection is important, stresses Antonia Renner on Supply & Demand Chain Executive. Treating your efforts as a part of the workflow as opposed to a "side project" will reduce the chances you'll need to rush or take shortcuts when something else comes up. Grabbing the right data in the right way to begin with is a lot like building a sturdy foundation—cut corners and you'll end up with a lopsided house that's hard to fix. If your senior management doesn't understand your motivations, you might find yourself manually prioritized away from your data focus.
2. Time your overhaul carefully.
If you're planning on completely redoing your data collection practices for vendors, don't wade in during a busy time, cautions Sonal Sinha, also on Supply & Demand Chain Executive. Instead, schedule your work during an expected lull so you don't disrupt your normal operational flow. Even if a lack of trustworthy data might cause a few headaches in the upcoming busy season, it's better to weather it out than to upend your current tools and processes if you expect an uptick in volume relatively soon. Instead, take this busy time to examine where there are loopholes and shortfalls in data communication and recording, and resolve to close them when you return to your assessment.
3. Don't overcomplicate data collection from vendors.
If your approach requires a lot of man hours or manual entry, there's a good chance you're adding in risk you don't need to. Renner advises businesses to make vendor management best practices focus on as much automation as possible, including letting data collect and "live" naturally within apps and ordering processes. Sometimes, bold new approaches and initiatives are overkill, and all that's truly needed is to streamline existing systems, doing things like removing duplication and reinforcing data hierarchy.
4. Don't be shy about using your new, clean data.
Once you've got a consistent recording system in place for your vendor data, part of keeping the approval of your stakeholders is making it useful in day-to-day operations.
Are your vendors matching their own stated fulfillment ratios? Are your shipments of materials or finished products arriving on time at the warehouse? Are there any notable trends in your ordering cycle that can be leveraged to gain additional discounts? If your data is properly collected and configured, you should be able to find these answers quickly and easily, saving your company both money and effort.
Basic data signals, such as knowing when to refill components or renegotiate PPU rates, are only one layer of understanding in your overall approach to managing data from your vendors. Your vendor management best practices should be geared towards making your incoming data trustworthy enough to be actionable—and motivating your department to use that data in meaningful ways that will translate to senior management. Setting up a solid data collection and recording system for your vendor information now will save you a lot of last minute "patch fixes" for an existing outdated (or nonexistent) system in the years to come.