Digitizing Procurement and Onboarding Suppliers: Problem Solved?
In this digital world and time of e-procurement, big companies are putting a lot of thought into transforming and digitizing purchasing.
One such company in the industrial sector has just chosen its new supplier portal with the aim of digitizing its bid management process. It is hoping to reconstruct its purchasing process, with two challenges in mind:
- Means, i.e., getting the procurement department more involved in the company’s global strategy
- Results, i.e., giving this department a new strategic dimension and equipping it with new methods to optimize purchasing performance and the ROI of approved investments.
But, worried about suppliers struggling with this new portal and subsequent slowdowns in submitting their bids, they soon started thinking about fast onboarding. Especially since in the previous two weeks, many of these suppliers had used the support system implemented by this big company—it seems they were right to worry.
What makes this transformation unique is not the need to onboard internal stakeholders (buyers, purchase requesters, finance and legal employees), but rather the need to onboard external stakeholders (suppliers, in this case), who play an essential role in Procurement achieving its performance objectives.
While the (potentially complicated) onboarding of internal stakeholders is essential, it’s clear that these efforts would be in vain if the transformation didn’t occur on the supplier side too.
To achieve Procurement’s performance objectives, digitizing supplier operations is on the critical path.
But what operations are we talking about?
- Simply creating an account on the Supplier portal
- Inputting the data necessary for referencing (company registration, accounts, etc.)
- Providing all the certifications required by buyers
- Acknowledging orders
- Accessing digitized supplier invoices
- Participating in a bid and all the back-and-forth communication it entails
Then there is all the communication necessary between the company and its suppliers over the year, for which emails are often counterproductive. It isn’t hard to imagine the negative impact possible on Procurement performance if suppliers are slow (or fail) to adopt the tools.
The company could find itself with only 20% of suppliers onboarded, automatically limiting Procurement performance due to a lack of competitors or because the certificates needed for certain bids are yet to be provided.
What is the best change-management strategy in this case?
The strategy is broken down into four essential parts:
Part 1 : Explain the reason behind the requests and requirements that the company gives its suppliers. For example, explain why the new regulations that apply to energy purchases are essential, meaning your energy suppliers must provide you with a certificate.
Part 2 : Split suppliers into standard categories, but most importantly, highlight “strategic suppliers” to offer them specific treatment.
Part 3 : Create a success board for supplier onboarding. This Success Board, together with objectives, is shared with each of the individual suppliers, and helps you continually track supplier progress on adopting new processes and complying with requests. Your suppliers will know where they stand and where they are heading.
For example, you notice that only 20% of your suppliers have completed the referencing process on the new Purchasing portal that was recently launched. You create a Success Board for the referencing campaign. The Success Board contains the given objectives for intermediate targets and deadlines and weekly status reports—everything is shared with your suppliers.
Or another example, following new regulations, you launch a campaign to obtain a certificate of conformity from all your energy suppliers. The campaign is steered using a specific Success Board containing a deadline (1 month, for example) which may differ depending on the supplier segment, as well as a weekly status report which is shared with your suppliers. You can then use this to follow-up with your suppliers once the deadline has passed.
Part 4 : Implement a unique motivation strategy for each supplier segment using an AI engine that ramps up or down in line with the Success Board.
This shows the right content to the right suppliers at the right time, and avoids information overload, which can negatively impact a transformation.
One more point to note: When dealing with suppliers, implementing these four parts must follow certain rules on confidentiality and compartmentalizing shared information.
It goes without saying that within a single change-management platform (for training or adoption, like InsideBoard), two suppliers shouldn’t be able to find one another or share information. Each supplier must therefore have their own specific and personal environment that can only be accessed by internal stakeholders such as buyers.