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SIMplification with Supplier Information Management


Aberdeen recently came out with a report called “The year of Suppliers” and for 2011, it is actually true in every sense of it. Gartner’ research estimates that companies typically spend $1000 per supplier annually in supplier management costs.



An average billion dollar company places almost thousand man hours every week in managing their suppliers which translates to a couple of million dollars annually in supplier management costs. Organizations looking to stabilize supply availability and costs are aggressively paying heed to the striking indications that clean, consistent and up-to-date information about their suppliers contributes heavily in bottom line savings, end-user productivity and working capital management.

Accurate information about these valuable production partners makes waves across the enterprise. Procurement professionals often cite off-contract spending and lack of spend visibility as two of the main reasons for high operational costs in the supply chain. Rising operational costs are aggressively gaining the attention of many in this field with sharp focus on ways to contribute to bottom line savings and effective management of working capital. Supply chain and accounts payable worry about supply disruption and high supplier management costs.

Supplier Information Management (SIM) allows an enterprise to aggregate, collect and maintain the information from all distributed systems within the organization, thus enabling a consolidated view of supplier data, process status and relationships. This arrangement benefits both the procurement and accounts payable functions to find insights and opportunities.

Let us see certain issues that arise in the procurement and accounts payable function along with the benefits that SIM has on offer.

Issue 1:
Off contract spending, lack of cross functional communication, improper account coding, duplicate/incorrect invoice, multiple payments caused due to manual processes.

SIM solution: With a Centralized Supplier Information system in place, information is available to all concerned increasing the spend visibility which reduces the off contract spending. Also, it results in accurate, timely and unduplicated payments to suppliers as per contract terms.

Issue 2:
Delay in invoice processing& Supply disruption.

SIM Solution: Continual supplier information with updates concerned withfinancial risk scores etc. ensure quick sourcing decisions thus reducing production delays caused due to supply disruption. Speedier processing of invoices possible because of a centralized supplier information system, ensuring cash discounts on earlier payments.

Issue 3:
Delay in approval of vendors and updation of key vendor information

SIM solution: A continual supplier information update ensures easy decision making thus reducing on the operational costs involved.

Thus, the importance of Supplier Information Management (SIM) can be summarized as follows;
- Ensures all supplier information is gathered, captured and updated in appropriate procurement and account payable systems.
- Processing payments in accordance with contract terms and realize the full savings.
- Meeting needs of products and services by matching to the preferred suppliers.
- Achieving better spend visibility.

Vendredi 17 Juin 2011
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