Supplier enablement is the process of changing the way you engage with your suppliers, to benefit from increased automation and improved purchasing methods.
Deep dive into the reasons why you should be doing supplier enablement, how to go about it and some hints and tips for ensuring success.
Why should you do Supplier Enablement?
Changing how you interact with key suppliers can deliver direct financial benefits in the form of cash savings or reduced effort, whilst softer benefits include better relationships with suppliers.
- Cash savings. A well-executed supplier enablement process provides several direct cash saving opportunities and can reduce invoice processing costs, protect sourcing savings and discount opportunities for prompt payments.
- Other benefits. Additional non-financial benefits are possible with increased supplier enablement like improved user experience, reduced overheads from supplier queries or improved communication with richer supplier data.
First Steps – Analysis and Segmentation
To be successful, the supplier enablement process needs to be targeted where the most benefits will be realised. Resources are scarce and expensive, and their efforts should be focused on your key suppliers.
Armed with this information you can segment suppliers into a priority list. Ideally, Tiers 1 and 2 will represent about 70% of your annual spend. You can now focus your efforts on Tiers 1 and 2, limiting work on tier 3 to communication with these suppliers. Discover more about this by downloading our ebook on this topic.
In order to enhance enablement of suppliers there are two main approaches:
- increasing automation of transactions and
- managing the content of those transactions
1. Transactional enablement.
This approach involves technical development to facilitate data exchange between your organisation and your suppliers.
2. Content enablement.
This option is all about helping people within your organisation to find and purchase the items they need, whilst ensuring they buy from preferred suppliers.
3. Supplier mandates.
For all suppliers that are identified to be part of your enablement programme, it is recommended that you consider issuing mandates to those suppliers stating that all orders placed after a certain date will be transacted using the new invoicing routes
Timing and Duration
In general, you should plan supplier enablement as soon as possible, however there are differences in the best time to implement it, depending on whether you are undertaking an implementation project or already have a digital procurement solution in place.
For organisations buying from overseas suppliers, the language used in the communications should be in the suppliers’ own language. In our experience this is essential for success. Ensure you get the language support you need for your supplier base.
Hints and tips
A successful supplier enablement programme can bring significant financial and other benefits to your organisation. Keep these tips in mind to increase the success of the process:
- Use supplier mandates
- Issue clear communications
- Do the analysis and segmentation
- Focus on the aims
- Plan on-going enablement
- Use proven tools and processes
Download our eBook and explore the reasons why you should be doing supplier enablement, how to go about it, and some more hints and tips for ensuring success.
This eBook is the 11th chapter of “The Ultimate Guide on Source to Pay Implementation”. The guide is a 12-part series developed by Xoomworks Procurement experts to help companies on their procurement transformation journey. Click here to view our 12-part guide.