Growing economic uncertainty, geopolitical unrest, and emerging cyber threats mean that security and risk management are now critical boardroom priorities. If that weren’t enough, businesses today are not only accountable for the factors that impact them directly, but they’re also responsible for those that impact their suppliers.
Take the recent Quest Diagnostics data breach as an example. Despite Quest’s strong internal cybersecurity infrastructure, the sensitive information of 11.9 million patients was hacked through a third-party billing vendor with subpar security standards. The lesson is clear: a company is only as safe as its weakest vendor.
Many organizations continue to manage suppliers, contracts, and procurement processes manually or with outdated, clunky technology that is too complicated for efficient use. These haphazard systems are, unfortunately, perfect harbors for risk, but there is tremendous opportunity here. According to a recent McKinsey & Company report, 56% of source-to-pay tasks could be “fully or largely automated using currently available technologies.”
While automation isn’t a cure-all, it does have the potential to drastically decrease overall risk. How? By reducing the “human factor” in supplier management and allowing sourcing employees to focus on more critical projects. In addition to putting risk mitigation at the forefront, automating supplier-related processes benefits businesses in these four key ways:
1. Automation Tools Increase Visibility and Transparency
Traditional manual processes that rely on spreadsheets, outdated document management systems, and physical paperwork increase the likelihood of human error and decrease businesses’ visibility into their supply chains. By automating, businesses can ensure complete and transparent supplier management across the organization by providing access to the right information at the right time.
Automated tools also increase Procurement’s visibility by extending processes’ scope, allowing you to bring more of your supply base under management. While many organizations have an in-depth understanding of the risk created by their Tier I vendors, that visibility quickly plummets when considering the list of “non-critical” vendors. Even the process of initially segmenting your vendors and maintaining that list is frequently painful.
2. Automation Streamlines Vendor Qualification and Onboarding
A strong and successful supplier relationship is built on an effective onboarding process. In many organizations, supplier onboarding is handled by various teams while supplier information is stored in multiple, siloed systems. This disjointed onboarding process only leads to disorganization, information gaps and increased risk. Onboarding and evaluation processes must be consistent across all vendors to verify that they meet (and continue to meet) internal standards. Strategically approaching supplier onboarding via automation helps save time, reduce risk, and improve overall communications and compliance.
3. Automation Helps Keep Pace with Compliance, Regulatory Standards and Industry Best Practices
With a higher demand for corporate transparency, consumers are paying more attention to how organizations conduct business and with whom. A growing number of government directives, regulations, and corporate policies require that procurement teams have immediate access to accurate compliance data and analytics that gives them visibility into every supplier. As a result, corporate best practices are constantly evolving – as they should – to respond to an ever-changing compliance landscape.
Today, many organizations rely on internal compliance knowledge and corporate standards for supplier vetting and onboarding. As global regulations and penalties mount, however, it is clear that this siloed structure is no longer viable. These regulations, coupled with consumer calls for transparency, have resulted in a push for businesses to adopt automated, centralized systems for supplier management that pull data from a single, master source.
4. Automation Aids in Uncovering New Opportunities to Reduce Spend
Automation technology gives sourcing teams easier access to the historical data they need to make informed decisions, allowing them to uncover opportunities for savings and future-proof their business during times of economic uncertainty.
Adding a procurement solution to help automate the enterprise supply chain enables companies to maintain more comprehensive oversight of their processes and identify potential savings opportunities. By gaining deeper insight into their supply and demand trends, companies can better anticipate their own needs. For example, retailers can minimize instances of overstocks and out-of-stocks, decreasing revenues lost to excess inventory, heavy discounts or customers going to competitors.
What’s next for supplier security in 2020?
As business leaders look to 2020, managing supplier-related risks may seem daunting. With the right technology and automation strategy, though, supply chain and procurement teams will be better equipped than ever to defend their company’s reputation and bottom line. Total insight into vendor networks, streamlined onboarding, compliance enforcement, and spend reduction practices are just a few of the ways automation can help slash supplier-related risk, empowering teams to protect and grow their business.
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Chris Crane is Co-Founder, Product at Scout RFP, a Workday company. As a technology executive with a passion for product, Chris leads product direction and has been instrumental in building Scout’s intuitive platform from the ground up. Prior to co-founding Scout, Chris learned the value of easy to use interfaces redesigning machinery and processes to improve efficiency at ERICO’s Aberdeen plant and earned a degree in mechanical engineering at Case Western Reserve University.