Supplier intelligence isn’t just about the information you gather, but your ability to use it to make better decisions. Getting information on suppliers is easier than ever, but procurement professionals still struggle with legacy processes that lead to long-onboarding time, inconsistent or incomplete vetting, and reactive supplier management. Here’s how to modernize your approach to supplier intelligence, and become a procurement leader.
Basics of Supplier Intelligence
Your company depends on suppliers, but has no direct control over them. This is a core problem faced by any company in the global market. If a supplier runs into serious financial troubles, a compromised individual in management, quality control issues, or any number of other problems, it can have devastating effects on your company. Contracts can mitigate this to some degree, but a contract is only as good as the organization signing it.
Supplier intelligence enables you to mitigate risks and improve your partnerships by learning as much as you can about supplier health and risk factors, so that you can choose reliable partners. Traditionally, supplier intelligence includes data on:
Financial Health
Factors like stability, liquidity, and debt ratios can help you predict the risk of supplier default or bankruptcy. It also can enable you to negotiate more favorable terms, and choose suppliers who can grow with your company.
Supplier Performance
Supplier performance data has traditionally come from three main sources: the supplier themselves, third party data, and supplier performance within your company. Companies have typically leaned heavily on supplier-provided information such as supplier pricing, inventory, lead-time information, and SLAs.
However, the way a supplier says they’ll perform can differ from the way they actually perform. That’s why third-party data also informs intelligence. Companies can use news, government and industry resources, and sometimes supplier customer interviews to suss out how a supplier performs in practice, and spot problems that a supplier may not disclose.
Once the supplier is onboarded, organizations can start recording how the supplier performs. Companies use scorecards to gauge quality, delivery performance factors like on-time rates and lead time, and responsiveness, which can be used to make future sourcing decisions.
Compliance Posture
Your supplier’s compliance posture can impact your own. Your vendors may provide attestations, internal, and third-party audits to prove that they meet your compliance needs in anything from cybersecurity, to industry specific laws, trade agreements, and ESG. Government and third-party information on compliance actions can help meet legal requirements and provide a more detailed and reliable view.
Security and Cybersecurity
While security overlaps with compliance, it also provides its own unique challenges. News, audits, security scorecards, and supplier policies help ensure a supplier can meet your security needs.
Location and Geopolitical Concerns
Location affects how well a supplier can serve your company. Choosing nearby suppliers can cut down on shipping costs, supply chain issues, and lead times. Companies also factor in geopolitical issues that may affect your supply chain, such as regional instability, sanctions, workforce disruptions, and infrastructure.
Challenges and Limits of Traditional Supplier Intelligence
While companies have had a lot of data available in theory, traditionally supplier intelligence has been peremptory — more of a CYA exercise than an in-depth evaluation. Companies perform initial risk assessments mostly based on basic financial information and supplier attestations, and future reviews may be even less in-depth. That means low-performing or risky suppliers can slip through the cracks until something breaks down.
The reason is that looking deeper has been impractical until recently. Gathering and compiling supplier intelligence is slow, labor intensive, and limited in scope. Companies are often limited to a point-in-time view, and updating your analysis requires you to duplicate a lot of work. As a result, companies have been limited to initial risk assessments, and periodic supplier reviews or strategic analysis.
Labor and Time Costs
Onboarding is time-consuming, and the longer you take to onboard a new supplier, the longer it takes for your company to address whatever problems that supplier is there to solve. In practice, companies often don’t have time to track most of their suppliers’ public history, perform searches for compliance actions and certifications, or do other in-depth checks.
Limited Information Beyond Tier 1
A bad tier-2 or tier-3 supplier can impact a tier-1 supplier’s ability to meet SLAs, as well as their financial, security, and compliance posture. However, most organizations have often not had n-tier information available, or the resources to track it down.
Companies have also lacked information on corporate leadership. Executives can have ties with competitors, hostile foreign countries, or individuals under sanction, which can put you at risk of IP theft, non-compliance, security risks, and financial risks, even in tier-2 or tier-3 suppliers. But most companies still go into new supply contracts with very limited information on their vendors’ leadership.
Effective Information Use Is Difficult
The more information you have access to, the harder it is to use effectively. A company may have thousands of suppliers just in the first tier, and reams of data on all the major ones. Sorting through attestations, news reports, third-party evaluations, financial records, certification data, and internal quality reports for a single supplier is a monumental task, nevermind doing it for hundreds or thousands of suppliers.
And once you’ve sorted it, you need to report on it in a way that other stakeholders can easily digest, preserving all the critical information without overloading them with irrelevancies. In this legacy predicament, it’s often better and easier to rely on a few key sources, rather than spending time and money gathering information you can’t practically use.
Data quality is another issue. Companies may have multiple names, and your records may contain duplicate copies with outdated or inconsistent formatting or spelling. Add to this the complexity of ownership structure, and keeping track of the people you do business with can become very difficult indeed.
Ongoing Monitoring is Impractical
Nearly every piece of critical information you’ve gathered about a supplier is liable to change over time. If you’ve gathered all your information manually, it’s a huge undertaking to update that information. In practice, legacy companies usually kludge together an update, using internal performance data combined with the original research. But this could mean missing new risks that have emerged since the last snapshot, such as financial troubles, compliance actions, and emerging geopolitical threats.
And even if you do update that information, you’re only looking for new data annually or, at best, quarterly. If something goes seriously wrong with a supplier between reviews, you aren’t likely to hear anything about it until it’s bad enough to disrupt your supply chain, breach your security, or subject you to a compliance action.
A Supplier Intelligence Platforms Changes the Game
A supplier intelligence platform automates away all the difficult work. You get superior, more up-to-date data; flexible alerts; the ability to easily select the factors that matter most to your company; and intelligent reporting that emphasizes the relevant data.
Data Sorting and Prioritization
Aggregators provide access to a wide range of datastreams, but the data is only as valuable as your ability to sort and process it. A supplier intelligence platform gives you all the background data you need on your suppliers, sorted and delivered in a way that makes it easy to use. Craft has over 500 datapoints and 1,300 datastreams, with high-level summaries and alerts to let you see negative signs and critical issues at a glance. You can quickly view data by type, region, company, criticality, industry, or stage in the onboarding process, not only for existing vendors, but for any vendor. Choose just the types of information you need for each supplier, region, or segment, so you can look deeply without getting overwhelmed with extraneous information.
Data quality is another place where a supplier intelligence platform really helps. A supplier intelligence platform cleans and standardizes data behind the scenes, so you can look into ownership structures at a glance without having to deal with incomplete or inconsistent internal records. From basic demographic and firmographic information to the minutiae of supplier health, it’s all clean, consistent, and readily available.
Workflow
When you have hundreds of data categories on potentially thousands of suppliers, your workflow determines what you can practically do with the information. An effective supplier intelligence platform is designed around the day-to-day needs of supply and procurement decisionmakers, providing an intuitive and flexible workflow for all decisionmakers, and an audit log in one.
Craft puts the things that are important for you as a user front and center. Priority Portfolios enable you to group and quickly look at supplier categories, such as critical suppliers, logistics, spend, or particular regions. Clicking to a particular supplier gives you a list of total risk signals, priority signals, and signal categories, which you can then drill down into.
That lets you give each company the diligence it requires. For commodity suppliers, you can quickly look up basic financials & cybersecurity scores. For critical suppliers, you can easily click down into ESG, regulatory compliance, foreign influence, negative media, and other categories.
The platform goes beyond providing intelligence to incorporate your entire vendor management workflow. You can track risk signals, make notes, tag other stakeholders, or open cases for customer defined categories. High-level case management empowers you to keep track of everything, with a built-in audit log to provide a single source of truth and show you’ve done your due diligence.
Staying Ahead of New Risks
Alerts aren’t glamorous, but in supplier intelligence, they can be game-changing. A supplier intelligence platform like Craft lets you know about danger signals immediately, so you can line up alternate suppliers, mitigate IP theft risks, and prepare for looming conflicts or disasters more quickly. Risk signals also surface at the portfolio level, so you can address negative signals by criticality, region, compliance category, or any other category that makes sense for your company. And it’s all deeply completely customizable, so you can set alerts for your most critical risk categories and suppliers, without getting bogged down.
Reporting With AI
Critical sourcing decisions may need to be run by multiple stakeholders. Craft’s agentic AI makes it easier by generating high level reports on vendors. A high level overview will summarize the most critical information, which is then broken down by category, showing risk signals and other important information in each category. That means no more late hours trying to summarize a dozen different risk categories in a user-friendly format.
How a supplier intelligence platform can make you a procurement leader
Your supplier intelligence platform can elevate you from tactical, reactive sourcing to a more proactive and strategic role. Here are a few of the ways Craft can help you do your job better, and show your value.
Negotiate better deals
Supplier intelligence can give you leverage to negotiate better vendor contracts. For example, you can use signs that a competitor is doing well relative to a current supplier, or spot potentially negative signals like decreased headcount or lowered financial growth, to pressure a supplier into giving you bulk discounts or other considerations.
Develop Suppliers
Craft gives you objective measures of supplier performance that can help you drive performance and reliability throughout your supply chain. For example, you can track changes in security scorecards to demonstrate your supplier is improving its security posture, or call attention if security needs improvement. You can also track risk signals and negative coverage, and work with your suppliers to ensure they’re remedied.
Implement Standardized, Data-driven Decision-making
A supplier intelligence platform immediately elevates your workflow, giving you standardized data across suppliers. As you gain experience evaluating suppliers with your new workflow, you’ll be able to standardize your approach. Develop benchmarks for supplier categories, schedule more regular reviews, and build strategies to gain the most favorable contracts which can be rolled out through your company.
Accelerate Onboarding
Onboarding critical suppliers can take six weeks or more. Supplier intelligence can cut the process to as little as three days, even in highly regulated industries. Directly import OCEA data, manage surveys from your platform, and evaluate all your information without the risk of human error.
Optimize Your Vendor Portfolio
Supplier intelligence empowers you to optimize for the things that matter to your company. You can choose your vendors to maximize supply chain resilience, rationalize your vendor portfolio by letting go of low-performing vendors, boost security, or even optimize for compliance and ESG signals.
Get Noticed With Craft
In procurement, it can feel like you only get noticed when something goes wrong. Craft can take you beyond putting out fires and digging through data, and let you make an impact by driving innovation.
Contact info@craft.co to learn how a supplier intelligence platform can help you (and your company) shine.