Why supplier data is critical to driving procurement success


Why supplier data is critical to driving procurement success

Digital scouting enables procurement teams to build knowledge of their supplier landscape, strengthen negotiation positions and achieve more transparency in supply chains. 

Today, business functions like marketing and sales are adept at using digital tools to analyze optimal target groups and the success of their campaigns. In contrast, many procurement teams still gather information about suppliers and their markets by hand. As a result, the global supplier environment is largely obscured for the majority of companies, and too many decisions in procurement are made on the basis of poor data. 

As a result, many purchasing decisions are primarily made on the basis of price and delivery capability. This applies to both the selection of new suppliers and the management of existing suppliers. For example, many companies have suppliers in their portfolio who offer them a decent price at first glance and deliver reliably, but lag behind in other areas like their ability to innovate or in their environmental performance. 

Broad, meaningful and consistent data sets on the entire supplier landscape are therefore essential and now possible. Modern AI-powered scouting software platforms use millions of data points on suppliers from verified global sources at lightning speed, regardless of the language. Compared to manual scouting, these technologies reduce the research time from several months to a few days. 

Supplier insights strengthen decisions

Very few companies know their suppliers’ capabilities inside out at category level. This creates blind spots that can become a threat to the stability of supply chains. The larger the supplier portfolio, the more difficult it is to constantly maintain the existing information manually. But if these gaps are not closed, the procurement team risks shortcomings on several levels. 

Of course, this also applies to the acquisition of new suppliers. In negotiations, information advantage can be instrumental – less data about the negotiating partners, the market and alternatives equals less insight into strengths and weaknesses. This equates to fewer opportunities to steer negotiations, build pressure and advocate for price reductions. 

Companies also rely on their partners, including suppliers, for their own innovation power.

Data-based screening and benchmarking enables procurement teams to identify and select the winners of innovation scouting in good time.

A lack of knowledge can thus directly limit a purchasing company’s innovative strength and market position, while the continuous enrichment of data strengthens the basis for decision-making around their supplier network.

Stimulating competition by comparing suppliers 

Where information on alternative supplier options is too incomplete, organizations can depend heavily on a small number of legacy suppliers, which can lead to limitations. For example, where competition is sluggish, suppliers may not pass on falling raw material prices to buyers. To remedy this, ongoing healthy competition is essential. 

To foster constant competition, procurement teams must be able to accurately compare their existing and potentially optimal suppliers. Whether it be raw material prices, quality characteristics, innovations, capacity or certifications; only if a company is aware of the possible shortcomings and advantages of its supplier partners – and at the same time is able to compare them with other options on the market – is it possible to achieve discounts or concessions, to demand higher quality or to drive innovation.

Sustainability starts with the supply chain

The issue of sustainability is now a major pressure and metric for most organizations, and is under the scrutiny of customers and investors alike. Companies must now do their homework on all levels, and procurement is uniquely placed to support them to deliver on sustainability goals. 

According to McKinsey, 90 percent of the damage caused by companies to the environment occurs along the supply chain. However, the rewards are significant – for example, this recent study shows how companies with environmentally friendly supply chains clearly outperform their competitors.

Digital scouting platforms allow rapid benchmarking for certificates and evaluations such as ISO standards. Companies can compare supplier performance on relevant chosen metrics that matter early on in their processes. Tools like scoutbee can integrate these benchmarks into the automated process of narrowing down all potential suppliers into longlists. 

Software can display environmental data together with conventional metrics on a single dashboard, enabling buyers to prioritize sustainable choices earlier rather than waiting until most buying considerations are already applied. Only when we have sufficient sustainable options at hand, can sustainability become a real factor. Otherwise, price will continue to be what finalists compete on.

Transparency throughout the supply chain

Supplier visibility across the entire supply chain is essential for achieving all forms of resilience. If a supplier is dependent on a single source itself, it is correspondingly vulnerable to disruptions. Today, both Tier 1 and Tier 2 suppliers must meet similarly high standards: in the innovation race, in quality requirements, in production conditions and in sustainability and ethical aspects. 

A holistic view of all relevant suppliers helps procurement teams to minimize risks, gain competitive advantages, achieve operational excellence and support the building of sustainable supply chains for the future.

AI-driven supplier discovery and insights can enable sourcing teams to truly shine, free up time for valuable tasks like supplier collaborations and negotiations, and above all ensure all decisions are made on the basis of robust information.

Streamline uses terabytes of supply chain data to fast-track your supplier scouting to a few hours. Want to see scoutbee in action? Explore our product tour and see how Streamline can transform your supplier discovery and insights, here

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