Supplier data enables procurement leaders to understand their organization’s performance more deeply, predict market opportunities and negotiate advantageous supplier contracts. When market conditions are favorable, these benefits provide a keen competitive advantage; during economic turbulence, they’re a must-have for business continuity — all in all, data is the bedrock of procurement decisions.
But the necessity of good supplier data isn’t breaking news. Rather, the advent of innovative technologies, including generative AI and large-language models (LLMs), has emphasized the importance of data hygiene across the enterprise. Case in point: In 2024, 43 percent of data leaders say their organization has adopted a “data and analytics culture” — up from just 21 percent last year.
I’m heartened by renewed calls for enterprise data hygiene. However, procurement leaders should be warned: Without a data foundation to autonomously enrich, validate and synthesize supplier data from disparate sources, your overall data strategy will remain incomplete.
Good data is critical
Most enterprises interact with thousands of data sources daily — and those interactions generate even more data. It’s predicted that worldwide data capture, consumption and generation will reach 180 zettabytes by 2025. Business interactions contribute to a significant proportion of this climbing number.
A data foundation is paramount to business success because it parses and enriches vast amounts of organizational information, ensuring it remains relevant, accurate, timely and available to all stakeholders. Data-rich departments like procurement particularly stand to gain from a robust supplier data foundation.
Generally speaking, supplier data can be sorted into two categories: internal and third-party information. Internal data comprises transactional data (i.e., invoices, purchase orders, receipts), contract details and supplier performance metrics gathered throughout a relationship. Third-party information includes supplier data — from certifications to company size and current inventory levels — as well as market trends and industry benchmarks.
When taken together, these data sources accurately depict an organization’s internal operations and external relationships. That knowledge enables leaders to be agile in a crisis, identifying new, better-suited suppliers when needed.
However, internal data and external information are unstructured by their very nature. Additionally, organizational data quickly goes stale because it lives in disparate systems, including external vendor spreadsheets and internal storage systems. This unconnected approach hampers the power of decision-making.
For example, poor supplier data can cause consequences for an organization’s finances. If supplier data is outdated, invoices can become easily misaddressed and lost, leading to payment delays, revenue loss and stalled projects.
Procurement departments require a more centralized and continuously validated data source to avoid these consequences.
The benefits of a data foundation in 2024
A supplier data foundation standardizes organizational data and improves access by eliminating silos. Importantly, it uses automation to accomplish these tasks, allowing procurement leaders and professionals to focus on high-value, resource-intensive responsibilities.
Leading supplier data foundations will automate:
Integration and verification of existing supplier data.
Identification and elimination of “bad” data, including duplicates and inaccurate information.
Validation of supplier information, including confidence scores associated with the reliability of certain information.
Provision of one true source of data, eliminating communication breakdowns and ensuring all stakeholders have access to the same information.
By automatically and continuously verifying external information, supplier data foundations improve an organization’s ability to make good decisions in the heat of the moment. This ability is critical because lack of trust continues to steer procurement decisions awry — and sourcing and procurement leaders are aware. In 2022, 82 percent of leaders said they lacked confidence in the completeness and accuracy of their supplier data.
Furthermore, enriched internal data empowers organizations with additional buying power. For example, consider a large enterprise with various sourcing hubs. This organization contracts with thousands of suppliers. In fact, several of its hubs contract with the same supplier. However, because the finance department doesn’t have visibility into this link, they’re unable to consolidate contracting and leverage a strong relationship to receive a better deal.
High-quality data provides several similar opportunities for financial progress, allowing leaders to pivot quickly, provide more reliable supply and demand for consumers, and make data-driven decisions. Simply put, a data foundation is the key to procurement success in 2024.
However, investing in data hygiene is not just about keeping up with the times; it’s about planting the seeds for long-term competitive advantage in an increasingly data-driven business landscape. By prioritizing data quality, procurement leaders can ensure their organizations are prepared for the present and equipped to thrive in the years to come.
Image credit: TMLsPhotoG/ Shutterstock
Stephany Lapierre is the Founder and CEO of Tealbook. A lifelong entrepreneur, Stephany spent 10 years building a successful strategic sourcing and procurement consulting firm and it sparked her desire to solve the supplier data problem. Stephany is passionate about establishing the gold standard for supplier data and making it accessible to every large organization, which is why TealBook’s Supplier Data Platform automates the collection, verification, and enrichment of supplier data across any data lake or enterprise system. TealBook is a leader in procurement technology and has been chosen by Spend Matters as one of their “50 Vendors to Know,” named a top 100 solution by ProcureTech, and recognized as a “Cool Vendor” by Gartner.
