Just how Critical is ‘Real-time Data for Supplier Collaboration’ in improving Supplier Relationship Management Initiatives?
Over the last seventeen years I have had the pleasure of working with many Oil & Gas Operators and their associated Suppliers on Supply Chain Collaboration initiatives. One key fact that sets the outstanding SRM initiatives apart from those that generate little returns, or that simply exist as part of a box ticking exercise is the level of real-time data collaboration in the SRM initiative. Real-time Data Integration – Improving Supplier Relationship Management is a vital read for a successful SRM initiative.
When I refer to real-time I don’t just mean that the Operator has at its disposal all the Performance data, KPIs, Risks etc, I mean that the system that stores these data sets, reports, dashboards, is accessible to both the Operator and also to the Supplier on a real-time basis. How can we expect to improve the Operator – Supplier relationship and gain supply chain efficiency from this partnership if the first time the supplier sees this data is when its presented by the Operator at a Quarterly Performance Review (QPR). This happens a lot in the Oil & Gas Industry.
You would be surprised how many thousands of supply chain analysts that are gathering supply chain data, day in / day out across thousands of suppliers that exist for each Operator. Data Analysts are great at using Business Intelligence / Data Warehouse / Data Cubes to gather and visually represent data in lovely graphs and charts for their management to view. I mean its just lovely. 🙂 The process and frequency of data collection differs between operators but the end result is that this data is then rolled up into performance reports for the individual supplier review meetings. However if this data and its reporting capability is not jointly accessible by the Suppliers themselves then its not effective to drive Synchronous Collaboration.
The first big problem with internal BI tools and systems for doing SRM is that the supplier review meeting is often quarterly, meaning that the data could be up to 4 months out of date by the time the meeting happens. In fact presenting information to suppliers 3 or 4 months after the fact is not only non collaborative its also often detrimental to the relationship as a whole. Yes there are still those that like to surprise suppliers at review meetings with glossy visuals of negative performance data. It gives them a sense of control via the shitty stick school of management. Surprises are not good for collaborative relationship building.
The second big problem is that often the internal supply chain BI teams are only ‘gathering data that they can’. What I mean by that is that they are not gathering data that is extremely useful for SRM but simply gathering data that exists in internal systems and available for them to easily pull. They need to go beyond the firewall and gather data that is of use to SRM initiative improvement. This means working collaboratively with your stakeholders and suppliers to determine :
- What Information / KPIs you both need to manage in the relationship (360 Degree)
- What data they have that is repeatable
- What data you internally have that is repeatable
- How to Automate / Integrate the collection of the data and information.
- What infrastructure / system platform to use to ensure both sides have real-time access to the Information (dashboards reports, opportunities, risks, alerts action mgt, etc)
So if we work collaboratively on a real-time basis sharing the data as it becomes available then we can action things in a more timely manner and mitigate the associated risks.
The very definition of Collaboration is as follows:
“Collaboration is a working practice whereby individuals work together to a common purpose to achieve business benefit.
Collaboration enables individuals to work together to achieve a defined and common business purpose. It exists in two forms:
Synchronous, where everyone interacts in real time.
Asynchronous, where the interaction can be time-shifted.”
Within the Oil & Gas Industry we can see a lot of Asynchronous data Collaborationat work in many Supply Chain Initiatives particularly in the area of Spend Analysis. However if we take the very nature and definition of Supplier Relationship Management (SRM) :
IACCM defines SRM as
“The function that seeks to develop successful, collaborative relationships with key suppliers for the delivery of significant tangible business benefits for both parties”.
The closer we get to Synchronous Data Collaboration the quicker we can make decisions that impact the supply chain being managed through SRM, and as the timeliness of decision making is key within Supply Chain initiatives the more value we can leverage for both parties.
If Operators keep information to themselves until the performance review meeting / QPR then they are not engaging in Synchronous Collaboration and the value of the SRM initiative is not maximizing value add. On the flip side the supplier can’t action this in a timely manner either.
While not exhaustive I have outlined some of the key negatives and positives from both approaches on data collaboration.
Figure 1.1 above highlights just some of the characteristics of such an approach
Likewise looking at the successful SRM initiatives we see that there are many characteristics that are similar in terms of the approach taken.
Figure 1.2 below outlines some of these characteristics.
According to IACCM collaboration between strategic partners has many benefits:
- Collaboration enables companies to pursue a broader range of value creating relationships and to achieve higher value from its existing relationships.
- Companies that are effective at collaboration outperform their peers.
- By planning for a collaborative relationship, and understanding the key elements, companies can avoid pitfalls and achieve results more quickly.
In my view there are many things that can be done to speed up the move towards real-time data collaboration within SRM. I have listed a few that I think are key to a successful initiative.
1) Share real-time data / information / reports / dashboards with your suppliers through a cloud based SRM Portal. You need to ditch the concept that all supplier data needs to be kept beyond suppliers reach, behind the company firewall.
2) Integrate your SRM with other data sources to avoid data duplication. To often we are waiting on either internal personnel or supplier personnel to enter data when that data already exists in other systems.
3) Integrate your SRM with Supplier Information Sources. You would be surprised how receptive your supplier will be to avoid data duplication.
4) Integrate Workflow and Alerting functionality that sends alerts to all parties involved in the relationship. Alerts to suppliers are key here.
5) Allow suppliers to build and run their own reports on their data within your SRM system. They may want a different format for their needs.
6) Allow full drilldown functionality to the lowest level possible.
In summary the sooner we move towards real time collaboration the sooner we will be able to builder better SRM initiatives that add more value in a timely manner.
Thanks / Feedback / Experiences Welcome
If interested or have questions / suggestions around the article feel free to like, or share this post or better still leave a comment / question and I do my best to answer it promptly.
I welcome any feedback on this post especially from those that have looked into this area in any respect, irrespective of whether you have achieved this or not at a systems level.
Also keep any eye out for the other adhoc articles I post on SRM, SPM, e-Procurement, and Supply Chain Data Management. See List below.
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About : Daryl Fullerton
Daryl is a Supplier Performance and Relationship Management Specialist at Outperform SRM. He provides guidance and consultancy on the design, development and Implementation of various Supplier Performance & Relationship Management Systems for Global Oil & Gas Operators and Service Companies across Upstream, Midstream and Downstream Sectors.
Specialism’s include Supplier Performance & Relationship Management, Supplier Risk Management, Supplier Enablement, Operational Risk Management, Contract Compliance Management, Scorecards, KPI’s, P2P Process Automation, PIDX Standards, and Management Information & Reporting Systems.
A keen promoter and believer of the importance and focus on his ‘partnering to solve approach‘ in improving Operator / Supplier Relations in 2015 Daryl was awarded the honor of “Supply Chain Pros to Know” in recognition of the leading supply chain professionals and experts worldwide.
About : OutPerform SRM
OutPerform SRM is a management consulting firm that helps leading Oil & Gas businesses establish value added solutions for effective Supplier Relationship Management (SRM). We help our clients reduce inefficiencies, reduce costs, and make lasting improvements within their Supplier Relationship Management (SRM), Supplier Performance Management (SPM), and many more important business critical Supply Chain Initiatives . Through our hands on experience with Major Oil and Gas Operators over the last 17 years we’ve now built a firm uniquely equipped to this task across all Major Category Lines.
Our Experts have Experience of working with a wide range of internal and external stakeholders with the ability to build relationship and influence outcomes. Our Experience of supplier performance management includes detailed knowledge of processes and frameworks including commercial performance management of contracts and knowledge of supplier risk management techniques.
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