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Dale Burgess | 25 Jan 2022 | 7 min read
How Software Can Help with Supplier Discovery
As much as we might wish otherwise, no business is an island, where everything can be done inside its shores and the whole operation is self-sufficient. In truth, we all on the goods and services delivered by external suppliers.
For example, when the Victorian Government rolled out its Myki public transport ticketing system, the success or failure of the project rested largely with Kamco, an external supplier which, in turn, relied on its own suppliers. Another good example of supplier dependency is Starbucks; a vital part of their business strategy is procuring unprocessed coffee beans directly from farms at low cost. If they can’t get a good deal, or their suppliers fail to deliver, this can impact their bottom line.
While it’s clear that finding outstanding suppliers can make a massive difference to operations, it’s often less clear on how to find them. In this article, we cover what obstacles organisations face when it comes to supplier discovery, and how the right software can help.
What Are the Barriers to Supplier Discovery?
Organisations can struggle to find the right supplier for many reasons. Apart from obvious challenges - like finding suppliers of niche services, or those who serve remote locations - here are six other reasons supplier discovery might be hampered.
1. Staff Can’t Find the Supplier List
Many organisations will have a list of preferred suppliers that staff can use. However, staff may not always know this exists, or be able to find it when it’s needed. Even if they find it, it may not be up to date, or the suppliers on the list may not be able to provide the required good or service. This is more likely if what they need is niche.
Not being able to easily find qualified suppliers can result in rogue spend, also called maverick or unmanaged spend. This is a thorn in the side of many procurement departments.
2. Difficulty Comparing Supplier Rates
When deciding on a supplier to source from, an important factor is getting a competitive rate. However, it can be hard to figure out at a glance who is going to offer the best deal, and then compare suppliers against each other.
3. Finding a Supplier That Can Handle Demand
You might be able to find a supplier that can provide you what you want, but can they handle the volume and frequency you need?
4. Identifying Suppliers That Meet Social, Ethical and Compliance Requirements
It’s common for organisations to have to meet certain compliance benchmarks when it comes to procurement. For example, they may have to make sure 20 per cent of all procurement is with local suppliers, or that suppliers need to provide regular updates to confirm they are engaging in ethical business practices.
Finding out if a supplier has the right compliance accreditation or insurances before you do business with them can be a time sink. Figuring this out can act as a barrier to supplier discovery.
5. The Buyer is Not a Procurement Expert
If you’re not a procurement professional, it can be difficult to know how to find appropriate suppliers. You’ve also got an entirely different role to fulfil, and any time you spend on procurement is time away from that.
6. Knowing Who is Blacklisted or Not
You may reach out to a supplier, thinking they tick all the boxes, only to find out later that your organisation has used them in the past and they have failed to deliver. This supplier intelligence may only rest with a few individuals, and depending on the size of your organisation, they may never pass it along to you until it is too late.
How Does Software Help with Procurement Supplier Discovery?
Procuretech – procurement technology – is designed to make the procurement life cycle easier, and supplier discovery is no exception.
Using solutions such as VendorPanel, supplier discovery can be made easier for staff in the following ways.
1. Organising and Sharing Internal Supplier Lists
Procurement software can be used to manage internal lists and panels so they can be actively managed and shared within an organisation. These are kept within the procurement system and are presented when a staff member needs them, so they are presented with the organisation’s preferred suppliers upfront.
Onboarding these suppliers is as easy as sending an invite to them via the system. The supplier simply fills in the details you need (e.g., details about their organisation, rates, compliances, insurances, etc). These are then visible to staff, making it simple to tell who is qualified and who is not. These compliances can also be tracked through the system.
2. Supplier Intelligence Badging
With procurement software, you can “badge” supplier listings with third party data. This shows up as an icon next to the supplier’s profile. These badges can be used to flag a supplier’s compliance status, if they are a social, indigenous or disability enterprise, their sustainability rating, and more.
Staff can filter their supplier search based on these badges. Other supplier intelligence data can also be presented to the user, such as if the supplier has responded to requests from your enterprise within the last twelve months, how many responses have been submitted and how many were successful.
This intelligence makes it easy for staff to find a supplier that will meet their needs.
3. Geolocation of Suppliers
Over the last few years, there has been an increased focus on supporting and using local suppliers - in no small part due to Covid-19’s disruptive effect on businesses and global supply chains. With the right solution, staff can search for suppliers within a certain geographic radius. This makes it easy to find businesses within a set location.
More advanced solutions allow you to limit your search to suppliers within a local government area. This is a particularly useful tool for councils and businesses to directly support a specific municipal area.
4. Supplier Marketplace
Even if you have an internal list of preferred suppliers, you may need to find entirely new suppliers for a procurement event. This is where a marketplace solution is useful.
For example, the VendorPanel marketplace provides an avenue for staff to search for suppliers and pull up their relevant information. Unlike a web search, the information is more tailored towards procurement. The user also doesn’t need to leave the procurement platform, even when emailing the supplier – this keeps all the data and correspondence in one place for tracking and reporting purposes.
Just like with internal lists, suppliers can be invited to join the marketplace with ease. This makes the businesses more discoverable, which helps both staff and suppliers.
5. Sharing and Using External Lists
Sharing lists of prequalified suppliers can be extremely useful, for example in the public sector or in a franchise system. With procurement software, you can easily construct a list of quality suppliers and collaborate with other organisations. This data sharing is easy, particularly when you are using the same solution.
6. Rate Card Comparison
Some procurement solutions will allow you to gather information on rates from suppliers and present these to staff in the form of rate cards. When trying to decide on a supplier to use, these rate cards can be cross-compared to see who will provide a competitive rate.
7. Supplier Surveys & Review
If your staff have used a supplier before, some solutions have an automated survey function. This is sent out after a set time to the buyer, prompting them to score the supplier on things like service and price, and leave comments. This feedback is sent to the administrator, who can then set up a meeting with the supplier. If the supplier keeps underperforming, they can be removed from the list so that staff do not use them again in the future.
8. Staff Assistance & Compliance by Default
A procurement solution can make supplier discovery easy by guiding staff intuitively through the process. It automates certain steps, provides supplier intelligence when it is needed, and ensures staff follow your organisational policies by default. It can also offer built-in help functionality such as a chat feature and educational on-demand resources to further help them on their journey.
All of this reduces the amount of queries the procurement team have to answer, freeing up their time for other things.
Looking for a Software Solution that Offers All This and More?
VendorPanel is a source-to-pay procurement solution that provides you with everything you need for any sourcing event, including assisting with supplier discovery. Contact us today to learn how we can help you on your journey to a new and better type of procurement.
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