There is probably now doubt about the statement that “supplier enablement is a key to success factor for purchase to pay ROI” but it is also un-doubtful that it is not easy to achieve, so how can you be successful here.

 

Let’s start of with a definition of Supplier Enablement, (Source:http://en.wikipedia.org/wiki/Supplier_enablement http://en.wikipedia.org/wiki/Supplier_enablement): Supplier Enablement is the process of electronically connecting suppliers (or other trading partners) to a company's supply chain. Supplier enablement is achieved when suppliers of goods and services are connected to a company's back-office systems to exchange critical business documents such as purchase orders, invoices and other information. Suppliers can be connected, or "enabled," using a variety of means including Electronic Data Interchange (EDI), Extensible Markup Language (XML), Web forms or other e-commerce tools.

The benefits of supplier enablement include reduced supply chain costs, improved invoice tracking, reduced procurement costs, reducing or eliminating non-value added (manual) processes, and improved communications. Supplier enablement extends the value of a company's internal IT investments, such ERP, into their trading communities--expanding the ROI on an initially internal investment.

Good news is that there are several benefits for both trading partners and it increases for both the value of investments in existing IT systems. It should be a no-brainer, but it does require a plan because it is new too many trading partners and there is no single approach that fits all. Depending on trading partner size the right integration solution is required and first off all awareness needs to be created.

I will focus on connecting the supplier side to the network, by sharing some thoughts on how to go about it - a list of best field experience practices:

 

1) Alignment between AP and Procurement and beyond - Remove department oriented thinking and have a consistent message to suppliers and users, so that the full benefits can be leveraged for all departments

    • Involve sponsors from all impacted departments
    • Align department goals to strategic project objectives
    • Have all communication developed and approved by both departments
    • Get legal and tax involved early in the process

 

2) Staffing - Ensure proper staffing through all project phases and leverage specialized Supplier Enablement (SE) service providers or shared service centers

    • Key buyer activities:
      • Provide access to supplier master data
      • Supplier communications (initial message)
      • Align internal technical contact person for integration and process questions
      • Professional Buyer for contracts and catalogs
      • AP Personal for invoice related questions
    • Leverage specialized SE service provider for
      • Supplier communications (after initial message)
      • Calling campaign and follow-ups
      • Supplier support
      • Progress tracking
    • Leverage Vendor Master Management solutions
      • Maintenance of supplier master data
      • Clean-up incomplete & inaccurate supplier master data
      • gather the “right” contact details by leverage online data collection web-form and supplier calls to validate and update       the baseline data
      • provide easy access to reliable supplier master data

 

3) Supplier targeting and On-Boarding Plan - On-board the “right” suppliers at the right time and assign suppliers to the right enablement segmentation

    • Build supplier target list per established business objectives
    • Conduct spend analysis to prioritize suppliers for targeting based on recent buyer spend data (last 12 month)
    • Base strategy and flight plan on buyer roll-out plan (i.e. regions, division, alignment with backend integration) – spend management service providers like Ariba can help here based on knowledge databases and supplier directories (de-duping and hierarchies)
    • Always position a joined enablement of Purchase Orders and e-Invoicing
    • If using a 3rd party supplier network (like Ariba Network) use the following order for supplier recruitment campaign

1.     Matched suppliers

2.     High volume suppliers

3.     Discountable suppliers

4.     Mid to low volume suppliers

    • Establish enablement type according to transaction volumes

1.     < 3 transactions per year è no e-enablement

2.     < 300 PO-invoice transactions per year è PO-Flip by using Quick-Enablement

3.     > 1,000 transactions per year è EDI/XML (Integrated suppliers)

    • Depending on the enablement type the lead time differs between 2-90days
    • Use performance measurement approach to measure results against stated objectives and make necessary adjustments

 

4) Achieving Compliance - Get supplier buy-in by providing an incentive to e-Invoice and reduce the amount of non compliant suppliers, these are suppliers not using the electronic channels even though they are enabled (e.g. continued receipt of paper from e-Invoice Ready Suppliers)

    • Establish a responsive exchange with suppliers
    • Start of with a CFO / CPO memo of initiative and objectives (Company letter head, Notification of initiative, Firmness of customer intentions)
    • Training / Information of suppliers  - Use of e-Invoice “Portal” & Webinars / Extensive training materials and welcome pack
          • But don’t overload the suppliers – provide the right content at the right moment
          • Involve marketing departments
          • Use any supplier communication to emphasize program importance
      • Get supplier buy-in by communicating the value to suppliers early and often, e.g. electronic visibility to invoice status or improved communication with the buying organization
      • Maximize supplier compliance to your e-Initiative
      • Paper invoice rejection program
          • Non-PO invoice rejection program: No Purchase Order, No Payment
          • Supplier “e-Ready Flag” in AP for paper invoice rejection
          • Improve supplier relationship
          • Accelerate supplier adoption and accuracy
          • Run reports – follow up with non-compliant suppliers
      • Amend contract clauses and drive e-Readiness via Sourcing, requires are partnership with Strategic Sourcing
          • Run reports on (non-)compliance to support follow-up

    1. Email reminders

    2. Professional buyer

     

    5) Measure Performance - Maximize the supplier participation and Improve performance

      • Link MBOs to compliance success
      • Benchmark processes against peers and industry
        • 80% target-to-enroll ratio
        • 80% enroll-to-transact ratio
        • PO and Contract exceptions reports
        • Invoice exceptions reports

     

    If you have additional best practices please share them.

     

    Best regards, Olaf Schrader (Senior Production Manager for Supplier Enablement at Ariba)