Did You Send Your Suppliers a Holiday Card?

There are six days until Christmas and my Outlook inbox is beginning to fill up with electronic holiday cards from vendors.  About 50% of the cards I received this year are from companies I don’t even know.  I guess they are trying to sell me marketing services.  It has been common for many years to send cards and gift baskets to your customers around the December holidays.  But in recent years many companies have begun to send holiday cards to their key vendors as well.  Such a gesture confirms recognition of the supplier’s role in your success, which can be a motivating factor for high performance in the coming year.  Few would probably disagree with the logic of such an approach, but many companies don’t send holiday cards to suppliers nonetheless.  One of the key reasons why companies don’t send cards is that they don’t know who their suppliers are!

Who are my Suppliers?

How could that be you might ask?  Surely, if a company is supplying goods or services to your business then someone, somewhere must have a record of the vendor and maintain the relationship.  This is true, but in many companies there is no centralized repository of information about suppliers.  The best list of suppliers often is maintained by the Accounts Payable (A/P) department, which is charged with paying the vendors.  But the A/P master vendor file typically contains only limited data about the supplier.  For example, no individual contact information is stored beyond the billing contact or collections clerk. 

We encounter this situation frequently at GXS as we often engage retailers and manufacturers to perform on-boarding of trading partner communities.  Each ramping effort varies in terms of business processes, geographic scope and e-commerce standard used.  However, there is one common theme that exists across all community on-boarding projects – no one has a good list of their suppliers.  Another way to phrase the problem would be in the context of Master Data Management (MDM) for supplier information.

 
 Did You Send Your Suppliers a Holiday Card? 

Supplier Master Data

Product master data and customer master data have received a great deal of attention in the past five years, but supplier master data has been a lower priority.  The lack of focus on managing supplier data is not surprising.  There is no direct correlation between the quality of vendor information and revenue growth.  Most CIOs and CFOs would conceptually agree on the value of supplier master data, but I suspect few will invest in an on-going, multi-million dollar effort to keep vendor information accurate, complete and up-to-date. 

But before we discuss potential solutions, let me further explain what I mean by supplier master data.  Examples would include the vendor’s legal name, headquarters’ address, names of subsidiaries and ownership model (private or public).   Master data could also include contractual information such as payment terms (30, 60, 90 days), credit relationship (letter of credit or open account) and performance SLAs.  Another set of data is needed for individual contacts within the supplier.  Individual data might include the employee’s role, contact details, functional skills and relevant work history.  Finally, corporate social responsibility is driving companies to gather more information about their suppliers’ operational models.  For example, many large buying organizations are surveying their suppliers about their workforce diversity, environmental policies, labor policies and business ethics. 

Tell Suppliers to Manage their Own Data

Here is an idea – why not let suppliers manage their own data?  Suppliers are more motivated to ensure data is accurate than the buyer’s organization.  Suppliers want to be contacted for potential new orders, payment receipts and customer service issues.  Furthermore, the emergence of web 2.0 technologies has accustomed individuals to maintaining their contact details on professional networking sites such as LinkedIn, PlaxoPlus and Xing.  Why not create a self-service portal for suppliers to keep their corporate and employee data accurate, complete and up-to-date?  One you have the supplier master data organized into a centralized repository there are numerous applications which can leverage the information.  Examples include:

• Conducting surveys with the supplier community
• Issuing policy change announcements
• Soliciting ideas and feedback (crowdsourcing)
• Rolling out new e-commerce programs
• Distributing annual holiday cards

 
Example of a Holiday Card received through Rollstream

Unlike some of my other recent posts about leveraging Google Insights for demand forecasting, the idea of self-service for supplier data actually exists today in a number of commercial applications.  For example, you may know of a company called Rollstream, which was among the innovators I placed in my list of Top 10 IPOs I would like to see in 2010.  Managing supplier master data is just one aspect of the powerful feature set of these Enterprise Community Management applications.  Both the use cases and the benefits of these types of applications are growing exponentially as more users enroll, but this is a subject I will leave for a future post.