When we talk to many of our customers what we find is that the procurement organization is hearing a lot of negativity from their suppliers and they simply dump it off on management, etc., without rectifying the issue.


The core issue is -- your company is moving forward with your eCommerce program and compliance around eCommerce readiness by your suppliers will need to become more stringent over time. You know this will cut costs on both sides and the Ariba network is uniquely positioned to help you cut those costs and drive your revenue.


Do you currently have a Buyer Compliance Program? A successful program should have the following:

  • The foundation for Collaborative Commerce communication is the Compliance Policy
  • The Compliance Policy has a direct effect on the effectiveness of supplier enablement efforts

 

Components of a Compliance Policy

  • Establish an edict
  • Internal communication
  • Supplier communication
  • Supplier Enablement NCE Process

 

Weak Policy
Moderate Policy
Best in Class
  • No Internal Communication
  • Optional Participation
  • No Deadline
  • No Consequence
  • Internal Awareness
  • Expectation Set
  • Deadline
  • Incentive
  • No Consequence
        • Internal Buy-In
        • Expectation Embedded
        • Mandatory
        • Deadline
        • NCE Process in place
        • Incentive/Consequence
          • Net 60
          • $25 paper fee
          • No paper

         

        Incentives / Consequences

         

        What is one of the single most important components of a compliance policy that you can do….
        Issue an Edict!


        Expectation — Inform suppliers of the project and what you want them to do
        Deadline — Set a deadline date for enablement
        Incentive — Provide an incentive for participation
        Consequence — Establish realistic and executable consequences for Non-Compliance
        Togetherness — Assure your suppliers that these changes are mutually beneficial; You are in this together

         

        Deadlines - Make sure you set these!
        Buyers should set a date for the cessation of transactions outside of the Ariba Network (Paper, Email, Fax, other systems, etc.)

         

        Deadlines can be set in many ways:

        • Overall Corporate deadline for paper transactions
        • Specific allotted time post registration
        • Deadline for each enablement wave


        Deadlines can be layered:

        • ACME Corp will no longer accept paper transactions after December 31st
        • All suppliers must register on the Ariba network within 4 weeks of Relationship Request letter
        • PO Flip suppliers must begin transacting within 2 weeks of registration
        • Integrated suppliers must begin transact ting within 6 weeks of registration
        • All suppliers targeted on January 1st must be transacting by March 15th

         

        Incentives / Consequences

         

        Incentives and or Consequences are often one of the most overlooked or under-valued components of the Compliance Policy
        Incentives and/or consequences give “teeth” to the enablement request

         

        Examples of Incentives:

        • Ability to do business with Customer
        • Favorable Payment terms
        • Preferred supplier designation

         

        Examples of Consequences:

        • Extended Payment Terms
        • Paper Processing Fee
        • Discontinuation of paper delivery/receipt


        Internal Communications - Can You Hear Me Now?

        The largest deterrent to ensuring supplier compliance is conflicting buyer messages!
        Your Internal Communication should include:

        • Initiative Announcement letter to Internal Resources from Executive Sponsor
        • Training for Key Stakeholders
        • FAQs/Talking Points for Key Stakeholders
        • Periodic reminders of Initiative (desk drops, buyer Intranet posting, Email, performance reviews)

         

        Key Internal Communication Messages

        Strategic

          • Business strategy, expected value and benefits
          • Program timeline and measures of success
          • Critical success factors

        Operational

          • Specific operational changes resulting from the initiative
          • Process, technology and people objectives
          • Consideration of local operations and impact
          • Team accountability and involvement, particularly as it relates to compliance
          • Actions to be taken to prepare stakeholders

        Individual

          • Impact on individual & team goals and objectives
          • Individual job and career benefits: “what’s in it for me?”
          • Specific job requirement changes/impact on roles & responsibilities
          • Activities and preparation for change resulting from program

         

        Supplier Communications - Can You Hear Us Now?

        The Compliance Policy should be pervasive in all supplier communications:

        • Relationship Request Letter
        • PO Terms & Conditions
        • RFXs
        • Business Awards/Contracts
        • Payment (Remittance Notes)
        • Supplier Intranets, Extranets, etc.

        Key Stakeholders should emphasize the Compliance Policy during supplier interaction

         

        Next: Ariba Knowledge Nuggets: Gaining Compliance in Your eCommerce Program Pt.2

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        Beverly Dunn is a Customer Success Manager with Ariba. All customers are invited to join the private Customer Success group on Ariba Exchange, where you can access the Customer Success    Spotlights, Lunch 'n Learn Webinar calendar and replays, and the  Ariba    Knowledge Nuggets.