Supplier lifecycle management

CASE STUDY

Supplier lifecycle management

INTERNATIONAL ADVISORY COMPANY

21 Territories in region

20000+ Suppliers

Requirement

The client, who operates concurrently in multiple Central and Eastern European markets, has noticed an opportunity to optimize costs through centralized management of suppliers.

Distributed supplier relationship management was seen as unnecessarily costly, especially since many suppliers were serving several local branches of the client at the same time. The issue was evaluating the costs incurred by these shared suppliers, making it impossible to negotiate group terms for the entire market.

According to the client, the supplier management process – their verification, evaluation, and potential termination of relationships – was not carried out efficiently enough. There was a lack of tools to monitor the necessary tasks and provide the required information. With over 20,000 suppliers to manage across the organization, the client had to look for IT solutions.

In addition, the client had to deal with the issue of conducting an independence check – verifying that the supplier was not also a client of the company (especially in the field of auditing), which could easily happen and be overlooked given the size of the organization.

Solution

Syndatis conducted a three-month analysis of the supplier management process and designed a system to support the entire process, which was then gradually implemented in the organization on Syndatis platform.

The process analysis covered the following issues:

Centralization of suppliers – ensuring the identification of local suppliers as global ones.
Full supplier life cycle management, from contract signing, through data updates, periodic reviews (in terms of turnover and quality of cooperation), to suspension or termination of cooperation.
Independence check, i.e. verification whether the supplier was audited by the client within a specified period.
Design of integration with the ERP system to extract necessary data for analysis and process management, as well as to transmit updated data.

During the analysis phase, several people from the client’s procurement, independence, and IT departments participated. Syndatis created comprehensive documentation and prepared a prototype demonstrating the most important functions of the future solution.

The implementation was based on the Syndatis BPM4 platform (a few years later, it was transferred to the latest version of the system, Syndatis AIR). As part of the project, seven separate processes were prepared to handle different elements of the supplier life cycle, along with mechanisms allowing for efficient data management. Interfaces were built with the ERP system and other systems providing information necessary for the processes.

The implementation was initially carried out in the two largest markets, and then gradually, as the client’s capabilities allowed, additional territories were added. Each of these local implementations meant the need to organize the supplier database, connect the local ERP database to the Syndatis system, and, of course, implement new procedures and habits in the organization.

Challenges

Data consolidation at the regional level and high integration level with existing systems.

One of the major challenges of the project was to standardize the data structures and organize the data across all territories. The use of data templates and experiences gained in subsequent stages helped increase the efficiency of the launch process.

A high level of integration with the systems in the organization and the high intensity of data synchronization between documents within the system posed a significant performance challenge. The optimization of the technical aspect was an important element of our project.

Results

Identification of regional suppliers – it turned out that almost one-fourth of them operate in multiple markets – allowed for price negotiations at the regional level and significant cost reduction. Capturing suppliers who do not meet independence checks became instantaneous. Data throughout the region was organized and process management was much more centralized, resulting in savings in local branches.

Maintaining an organized process on Syndatis AIR platform has led to significant cost savings over the years (even up to 10% in the case of global suppliers). Ensuring compliance with procedures minimized risks associated with their violation. Automation of communication between systems streamlined the process and reduced the overall workload of the purchasing team by 15%.

Do you want to learn more? Do you have similar problems? Or maybe we have inspired you to look into other processes?