Having access to an accurate and up-to-date database of supplier information is a critical first step for any buying organisation wishing to gain a full understanding of its supply base. Using reliable supplier information plays a very significant role in reducing a buyer’s exposure to supply chain risk. But the problem facing many companies is in ensuring that the information held on its supplier database is not only accurate and up-to-date, but is also valid.
In many instances, suppliers are invited to register information on a buyer’s in-house system, with the onus on the supplier to keep their data up-to-date. Unfortunately, there are a number of flaws with this approach to building a repository of supplier information. For suppliers, too, this is not the most efficient means of providing data to buyers.
First, suppliers are often reluctant to enter information on to a proprietary system, particularly given the sensitive nature of some of the financial information required. So buying organisations are placed in a difficult position where they need to expend considerable effort and resources in getting suppliers to complete the questionnaire. Numerous phone calls and emails are frequently required, costing time and money.
Getting information on to a proprietary system is the first step. The data must be kept current, which requires the supplier to remember to update their information on a regular basis. Just how likely is it that a supplier will remember that the information they entered for a particular buyer is in need of updating a year later? For the supplier, this is a laborious process that often needs to be managed across a number of key customers. What’s more, the information required by each customer is likely to differ.
The greatest danger to a buying organisation comes from data provided by a supplier that is accepted on to the system without being validated. Validation is critical to ensuring the integrity of the information. Has a supplier entered the correct figures relating to its financial performance? Are the insurance documents submitted the appropriate ones for the contract or pertinent to that particular operating division? Are they valid or have they expired? Are health and safety certificates in place and in order? All these aspects of a supplier’s submitted data must be cross-checked and validated if it is to be of any use to a buying organisation and if the supplier’s risk to the buyer is to be managed correctly.
Undertaking the validation of supplier information is a time-consuming activity that requires expert knowledge and attention to detail. For the buyer, this action is essential. For the supplier, the validation process is important too, as certificates may have expired without the knowledge of the supplier.
To give an indication as to the number of errors that can be included on a proprietary system that uses self-registration with no validation of data, we return 70 per cent of questionnaires to suppliers for further clarification because they do not meet the data quality levels required by the buyer community.
Working in a collaborative community of suppliers and buyers aligned to the railway sector as we do, economies of scale make thorough checks on data a viable and highly efficient option, bringing cost and operational benefits to both buyers and suppliers. By being part of the community, the costs are shared and data only needs to be maintained at one central location, where it is checked by one centralised resource – all of which makes life easier for suppliers, too.
* Annette Poehl is director rail and transport at Achilles