The continued underinvestment in Procurement means that “Know Your Supplier” is little more than a dream for most organizations. This increases risk and slows down critical business processes. The latest infographic from Vendorful and PGSCP has the details.
You Probably Don’t Know Your Supplier
In a recent Vendorful-PGSCP survey, most organizations — literally more than 50% — lack visibility into their Tier 1 suppliers. Most also report that they know they have inaccurate category and contact information for the majority of their suppliers. That is, they don’t know what they’re buying from a supplier, and they don’t know who they’re supposed to talk to at the supplier. And it isn’t a hidden secret that no one in the organization has figured out yet, it’s a known fact that they reported in a survey.
How Can This Be???
It’s shocking to me how many organizations are okay with having no idea who their vendors are or how they work with them. I’ve said it before and I’m sure I’ll say it again: companies would never tolerate a comparable lack of visibility into customer and prospect relationships (this is the SRM-CRM gap). Yet even in a time of intense focus on reducing costs, those same companies are largely fine with not understanding where their money is going and all of the missed savings opportunities that go along with that.
Really, You Do Need to Know Your Supplier
I’ll keep beating the drum for companies to invest in supplier relationship management. But investing in any kind of procurement productivity improvement — even if it’s just hiring more people — will have an outsized impact on the bottom line.
Unless companies are willing to invest the time and money required, “Know Your Supplier” will remain little more than a buzzword that people talk about at conferences.
