Inaccurate Vendor Data Can Make Critical Corporate Initiatives Seem Foggy
[vc_row][vc_column][vc_column_text]Inaccurate Vendor Data Can Make Critical Corporate Initiatives Seem Foggy.
From procure-to-pay, supplier diversity and tax compliance to strategic sourcing and social responsibility, vendor data touches multiple processes and can have a dramatic impact on priorities throughout an organization. Without current, accurate vendor data, a long list of corporate initiatives can be rendered unmanageable or even impossible to execute.
Over the past few years, my team and I have written numerous articles and White Papers that outline many different scenarios where not gathering clean, accurate vendor data hinders the ability of large organizations to maximize their potential. In many cases, we were able to help those organizations create deeper controls and address their individual needs.
Here are several examples of issues an organization may have if they fail to collect update vendor master data:
When introducing new terms and conditions, a company had to send a letter to all vendors updating them of the changes; unfortunately, before we were called in, a staggering 80% of the letters were returned due to bad address information. In this case, most of the issues stemmed from a couple of acquisitions that were made. Unfortunately, they did not focus their attention on preserving or updating accurate vendor data in their Vendor Master file, and the process took much longer than it needed to.
At another organization, increased banking charges were addressed by bringing remittance advice routing in-house. The most expensive and time-consuming part of the project was acquiring correct email and fax numbers, which took inordinate amounts of time and money.
After purchasing a comprehensive e-invoicing solution, one company took more than two years to clean up their vendor data and information so they could take full advantage of the new technology, resulting in much-delayed ROI for the project.
The next step for them may be to deploy a supplier network.
A group of advertisers placing orders with various media companies started requiring diversity information reports. To prevent a significant drop in revenue from these advertisers, one media company had to engage immediately their 30,000 vendors and rapidly find a means of collecting essential supplier diversity information to avoid losing business.
As a check-fraud-prevention measure, one organization required all suppliers to receive ACH/EFT payments. This requirement cost untold dollars, and the company took more than a year trying to contact their suppliers about the policy change due to incorrect, missing, and out-of-date supplier contact information.
Because bad data can trickle down your supply chain, it is important to solve issues upstream before the impact becomes contagious. A lack of good vendor data can have a dramatic impact on your organization – from exposure to vendors with credit issues to reliance on proprietary suppliers for critical components to the more pedestrian (yet costly) issues that can arise from using vendors, not in compliance with your terms and policies.
Good vendor data housekeeping is not only a best practice, but it can also have a long-term positive effect on your company’s overall performance across every department.