One of the biggest challenges facing procurement organisations is access to accurate information about suppliers. Most buyers rely heavily on their ERP systems to provide the necessary, reliable data. However, there is a major issue.

‘Garbage in, garbage out’ is a phrase long associated with ERP systems. Put simply, if you don’t have good quality data, you won’t get good quality information.

Data on its own carries no meaning – it may be accurate or inaccurate. But information adds value and must be accurate, relevant and comprehensive if it is to be in any way useful. For example, one company recently sent  letters to its entire supplier base advising them of a change in terms and conditions – over 60 per cent of the letters were returned unopened, ‘not known at this address’. I wonder how many of the remaining 40 per cent also never reached their intended recipient, but failed to be returned.

The real value of an ERP system is derived from the application of good software to high quality information. If an ERP system is operating on poor quality data, value is diminished.

So how does poor data come to clog-up the works of so many ERP systems?  And how do you achieve high quality information?

In most instances, poor data is simply attributable to out of date material. The information may have been accurate at the time it was entered onto the system but unless someone updates it, it very quickly becomes obsolete – perhaps due to key contacts moving on, office relocations, or changes in product lines and services offered. An important consideration is that compliance information may also quickly become out of date, exposing the buying organisation to increased risk.

Commonly, data is maintained by in-house staff. This approach comes at a huge cost in terms of time and energy, and often it isn’t realised that data is inaccurate until it’s too late. But there is an elegant solution.

The best people to keep this information up-to-date are the suppliers themselves. The problem is a supplier cannot have access to a buying organisation’s ERP system.

However, there is a way that allows the supplier to access and update its information, and that is through a shared community environment.  A shared community database can be tailored to interface with a buyer’s ERP system as security controls can be put in place, allowing information to be updated daily. Key information may include: Suppliers’ contact details, name of the individual contact, email, phone numbers, even down to bank account information to facilitate easier payment. Importantly, compliance information can also be included.

Unfortunately, most organisations do not even realise that they have a problem. When I was a CPO of a large company, I thought my supplier information was fairly up to date and accurate. I only realised it wasn’t when we attempted some supplier analytics and spend analysis.  We brought in a consultant to review our procurement practices in order to identify improvement opportunities and we found out that our internal systems weren’t as good as we thought they were, and certainly did not approach anything like best practice.

Apart from the obvious inefficiencies of having a poorly maintained database one of the consequences of having inadequate supplier information is that you tend to deal with the same group of suppliers over and over again, whether they are competitive or not.

Getting your house in order is not a once in ‘x’ years’ activity. You need a process in place that keeps it in order all the time. A community model is the most effective means of achieving this and ensuring that the garbage stays out.