How Good Is Your Supplier Data?

Unlike decades ago when supplier information gathering was limited to phone calls, face-to-face meetings, and some clunky back-end enterprise management tool, procurement managers now have many different ways to keep tabs on suppliers.

Today, in addition to Web-based ERP and MRP platforms and email, purchasers can get information from Web search engines like Google or Yahoo, follow companies on Twitter and their executives on LinkedIn, create customized RSS feeds, sign up for licensed market intelligence services, and set up business interactions in the cloud. Companies need lots of supplier information to assess suppliers and risks, especially in uncertain economic times, and new tools and social media have expanded that data-tracking capability.

As the {complink 6398|Aberdeen Group Inc.} said in a report titled “Managing Supplier Risk With Third-Party Supplier Data,” organizations that leverage third-party supplier data “demonstrate lower rates of supplier failure and better performance from their suppliers.” (You can access the free report here until Nov. 2, but you have to register.)

Basically, this means that gathering supplier data from sources other than the suppliers themselves has become incredibly common and widespread. Aberdeen found that only 11 percent of its 132 survey respondents do not collect third-party-generated information on their suppliers.

But, having incomplete data is a significant business issue. Forty-three percent of survey respondents said “incomplete information regarding corporate supplier relationships is a top business pressure affecting supplier management.”

While Aberdeen found that 56 percent of respondents are doing third-party data tracking with critical suppliers, but best-in-class companies surveyed are doing more: They are monitoring and collecting third-party data from a majority of their suppliers.

There are measurable benefits of doing this kind of work. “Organizations using third-party data to monitor more of their supplier base had fewer suppliers experience catastrophic failure (i.e. environmental disaster, geo-political issues, bankruptcy) in the past 12-24 months and a higher percent of suppliers demonstrating on-time delivery or meet commit/projection completion dates,” the report noted.

All of this is to say that best procurement practices again are shifting, and supply chain managers and purchasers can create competitive advantages if they figure out ways of mining the information highway to manage supplier risk.

What Aberdeen doesn't really touch on and what raises red flags for me is: “How good is all the data that's out there?” Sure, we have an endless wealth of information available literally at our fingertips, and we use it exponentially more than we did just a few years ago. But as supply chain managers and purchasers widen their information and data-collection field, they also have to become savvy on how to quickly process and analyze this data and create the right context around how to use all this third-party information.

Without developing a plan of action around how to dissect data in a way that supports supplier relationship management, companies will be left with an alphabet soup of tweets, press releases, and stock reports.

10 comments on “How Good Is Your Supplier Data?

  1. Caitlin Hughes
    October 9, 2012

    I think you touch on some really interesting points here, particularly in regards to the limitations of using 3rd party data. We deal with many companies who are looking for very specific vendor information for their company. Such companies often find using a Supplier Information Management software provides greater benefits with a flexible, configurable and tailored supplier database that ensures complete supplier information that is directly relevant to an individual organisation.  

    There is no reason why both a third party database and Supplier Information Management systems shouldn't be used together, but to truly reduce risk companies need to ensure they have a clear supplier data strategy providing a complete picture of their current and potential suppliers in real time.  

  2. Mr. Roques
    October 9, 2012

    I see another post from this… how can Suppliers clean up their online profile in order to sell. 

    What about a 3 year old article saying that Supplier ABC had an issue? Maybe it gives the wrong impression, maybe they have completely changed from that moment but in google, that's what's relevant. 

  3. Ariella
    October 9, 2012

    @Mrroques good point. I'd imagine that data reports would give greater weight to the most recent information, though, so if a company had some recent good things, that could show up higher than the negative 3 years earlier, though it would not necessarily be suppressed altogether.

  4. SP
    October 10, 2012

    Agreed absolutely! Volumes of data if not managed or analyzed properly is just a pile of information that needs huge storing cost and maintenance in retrieval if you ever need one. I guess many organizations do not even see this as a point of potential revenue and increasing customer satisfaction. But a lot can be done with this data if there are dedicated teams working on it.

  5. Daniel
    October 10, 2012

    Jennifer, you are right. Now before doing anything most of the people do have a search about it in internet. When I start my career the procumbent process are very simple, just ordering it over mail or phone, then a face to face discussion about price. But now we do a bit of exercise and home work before doing any procurement. The availability of various details across internet made it simpler.

  6. GraniteIC
    October 10, 2012

    Companies are not doing a good job if they are relying on a supplier's status in trade association or club. I understand the Vision Tech scandal is now 2 years old and people want to move on. It's relevant because it is the perfect window into what companies do when no one is looking. 

    First I want to be very clear. Showing up on a “Victims List” isn't a reason to disqualify a company. Showing up on multiple lists, it's fair to start questioning your supplier's ability to qualify their suppliers. 

    We now know about JFBK, JJ Electronics, J&W Technology, MVP (and family of companies) Vision Tech. 

    I'm confident as Operation Chain Reaction progresses we will discover the above companies are the tip of the iceberg. We will see companies who have been hiding in Clubs get exposed. 

    Over 40% of the companies on the Vision Tech victims list are ERAI members. (I am an ERAI member not on any victim's lists) I get value from my membership. It's important to keep it in its proper perspective. It's just one of many tools in the tool box. 

    95% of the IDEA members are Vision Tech victims. 35% of IDEA members are on multiple victims list. We also know from the SASC Repot 2 IDEA members were named. One of those members had at least 28 escapes with one of their clients. These escapes traced back to Vision Tech or a Chinese e-waste dealer. I can not imagine how high that number would climb if all their clients took a second look at the material they received. One major Contract Manufacture has lawsuits against 3 IDEA members. All remain members in good standing. 1 IDEA member has an active FAA alert. Several IDEA members operate with multiple company names so it is unclear if the FAA alert is the actual IDEA member or if the alert is issued against a shadow company. As of this date the FAA alert remains active against the IDEA member.  There are numerous GIDEP alerts against IDEA members. 

    It is my opinion that their Club's main focus is to limit competition and the IDEA process is designed to create plausible deniability. Whoops sorry we tried, we tested it and you accepted it so we are not to blame. 

    The excuses are always the same. The tricky supplier and the counterfeiters are getting so good. The pass / fail / inconclusive results seem to land very heavily in the inconclusive column. They prey upon their customer's desperate need for the material. They send their clients a fancy inclusive report and down the road when the escape is discovered, It's hey we tried and you accepted it. Don't blame us you missed it too. The slick sales person convinces the client to not report them, because after all they shipped lots of good parts (at least undetected escapes) or reminds them of the wavier they signed. 

    Are there good honest quality companies who are members of ERAI and IDEA? The answer is: Absolutely YES!!! Are they good honest quality companies because they belong to these groups? Absolutely NO!!! 

    Good honest quality companies are that way because they choose to be. Bad companies often hide under the cover of a slick sales pitch that limits the clients purchasing options. 

    There are 500+ companies where there is no evidence of e-waste flipping. These companies do not show up on multiple victims list. A few of them belong to clubs most do not. 

    If companies are qualifying suppliers base on industry Clubs and Associations then they are missing out on a lot of very good high quality companies.

  7. tewodros95
    October 14, 2012

    Tanks I propose to Sanbel Mobile phone from China I need agreement from China mobile company because I live in African China is wev.good for our developement that is may choice I am working China mobile for five years now I won't Sanbel in to my people because I have a good name I know it time for me all people aspecting me but I need good tips of Mobil for a good result tanks for your helping me

  8. tewodros95
    October 14, 2012

    Tanks I propose to Sanbel Mobile phone from China I need agreement weht China mobile company because I live in African China is v.good for our developement that is may choices I am working China mobile for five years now I won't Sanbel in to my people because I have a good name I know it time for me all people aspecting me but I need good tips of Mobil for a good result tanks for your helping me

  9. dalexander
    October 16, 2012

    Jennifer, two times this week I visited a part search web application that listed distributors and their stock level for the part I was searching. Both times I went to the distributors website and called to verify inventory and was told that they had zero stock on hand. I guess the general message is that when you look at the third party players, you have to appreciate that the data may be out of date as a result that they may poll the distributor's stock status once a day or less often. It is always advisable to go to the source before you trust third party data gathering and aggregating services.

  10. Barbara Jorgensen
    October 16, 2012

    Douglas: I agree–a lot of this stuff is just out of date. Whenever I search for something on Google, if I get a second or third-party site, like the Yellow Pages or Yahoo City Directories, I scroll down until I can find the home page of the site or service I am looking for. Aggregation can be useful for some things, like spotting trends and certain types of analysis, but the more barriers you put behind a buyer and a purchase–such as these so-called directories–the more likely it is you lose the buy. I have to think data is the same thing–if you are looking for something, and the data is inaccurate, you are going to lose someone along the way.

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