Extracting Data from Suppliers Need Not Be Like a Root Canal Procedure

Posted on February 1, 2016 Published by Leave your thoughts

Companies communicate with their suppliers on multiple levels, but one that is becoming more important – and for many organizations increasingly onerous – is requests for compliance information.

These days companies must comply with a mind-boggling array of rules and regulations, and the compliance process often requires them to collect information from suppliers. In addition, there are certification and auditing schemes that companies participate in and various internal programs that require input from suppliers.

And the data collection burden is getting heavier. New regulations in areas such as environmental stewardship and corporate social responsibility, consumer demands for more product information, and the growing number of certification initiatives, swell the tide of information from suppliers.

The problem is that this type of data does not usually come with a ready-made incentive for the supplier to take the necessary time out to provide the requested facts and figures.

Extreme supply chain disruptions such as a product recall or a flood that knocks out a production line tend to generate urgent, do-or-die, appeals for information. But it’s hard to find a burning platform when yet another customer audit lands in your email inbox.

How can companies make sure that their requests for compliance data are fulfilled in an accurate and timely manner, without alienating suppliers or even losing them?

Here are eight ways to eliminate or at least alleviate the pain of collecting compliance data from suppliers.

Nurture a trusting relationship. This probably seems obvious, but as is explained below, asking suppliers for data is fraught with opportunities to create misunderstandings, undermine trust, and get into confrontations.

Clearly explain the rationale. Are you requesting or requiring your trading partner to fill out that comprehensive information sheet you’ve just sent? If your busy supplier suspects that this communication has more to do with off-the-cuff curiosity or an exercise in butt-covering than a genuine need for enlightenment, the chances are that your sheet will remain entry-free for quite a while.

Make sure the instructions are crystal clear. This is especially the case when you are looking for information from sub-tier suppliers who do not have English as their first language. But even sizable, English-speaking companies can be confused by vaguely worded requests.

Try to provide an incentive. This helps with the above. Maybe the incentive is some sort of assurance that participating in the process will help the supplier to secure more business. The inducement could be more specific. One company incentivizes remote suppliers by giving them free airtime on cell phones in return for data entries. There may be ways to turn the exercise into a win-win by providing useful data for the supplier.

Don’t overload. Resist the temptation to throw in that extra question just for good measure. Standardize these communications as far as possible. Remember: you are probably one of many customers that is dipping into this information well. A good way to standardize is to use the services of a trade organization. In industries such as electronics, trade bodies have developed standard templates for collecting supplier information.

Check whether you already have the data. Does a corner of the enterprise, perhaps Procurement or Business Continuity, already possess some of the data on suppliers you are asking for?

Tackle the question of privacy head-on. A reluctance to share sensitive information that could end up in a competitor’s hands, or will compromise their negotiating position especially in discussions over pricing, is a major reason for suppliers to stonewall when they receive information requests. Also, promises that your web site is totally secure may or may not provide the reassurance that the supplier is looking for.

Use technology to lighten the load. A company in the food business equips its growers in a number of countries with iPads for supplying field data. In this age of global connectivity there are many creative ways to harness the convenience of technology in the data collection process.

These practices will probably not result in suppliers knocking on your door for more audit forms. But they will grease the wheels of your data collection efforts, which improves the quality of both the data and your trading partner relationships





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This post was written by Sententia Partners

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