Suppliers are a key stakeholder and partner in a procurement ecosystem. As procurement officers search for better value, reliability and quality, more suppliers including suppliers from overseas need to be increasingly included into the procurement ecosystem. This increased risk exposure has made the already difficult supplier onboarding process even more challenging. Besides onboarding a potential approved vendor there is also an increasing need to onboard other suppliers as more organisations procure from the e-marketplaces to meet long tail spend. SourceSage acts as the sole creditor in a unique implementation of procuring from the marketplaces. SourceSage has also seen organisations increasingly shift its approved vendors to SourceSage’s procurement platform to consolidate the pool of suppliers and to get the best prices.
Like many organisations, SourceSage has implemented a Supplier Lifecycle Risk Management (SLRM) process to onboard suppliers, monitor andmanage its supplier partners’ performance. The monitoring and management process is a continuous process, and not just for a single procurement activity, and poor performing or suppliers with unethical practices may be offboarded and replaced by other suppliers. SourceSage expects its supplier partners toa dhere to the ethical standards and practices in its Supplier Code of Conduct (https://tinyurl.com/SourceSage-SCoC)
"SourceSage has an unique position in the B2B procurement landscape by acting as an aggregator of ecommerce marketplaces which comprises millions of catalogs. So one natural question we received from many MNCs resolves around "How does SourceSage ensure the suppliers are reliable?" Today, we are proud to say that our refunds/return rate from suppliers is at 0.69% which is extremely low compared to some of the largest marketplaces." said Yulin Ong, Vice President (Governance, Risk & Compliance)
SourceSage Supplier Lifecycle Risk Management contains eight phases to onboard and manage suppliers, and is divided into an onboarding component and a performance monitoring and management component. This article will share the supplier onboarding component of the SLRM which covers identification, evaluation, selection and onboarding.
Phase 1: Identification. SourceSage’s suppliers are marketplaces, suppliers from B2C and B2B marketplaces as well as other offline and online suppliers. As an aggregator of marketplaces for longtail procurement, SourceSage selects suitable and reputable marketplaces while allowing clients to filter by product categories and prices. The number of catalogs per marketplace per country can easily be more than a million items. Besides large and well-known marketplaces, regional and local marketplaces are also included. SourceSage will source and procure locally as a first principle. SourceSage procurement platforms allows side-by-side comparison of suppliers (from both the marketplaces and other suppliers) of the same product for greater transparency to allow the buyer to make an informed selection. These suppliers would be evaluated before they are listed as a suitable supplier.
Phase 2: Supplier Evaluation. This is the crux of the onboarding process. Visiting the supplier should be part of the process of knowing the supplier. The factors used in the evaluation in a qualitative and quantitative process are as follows:
Phase 3: Supplier Selection. Supplier selection is a multiple criteria process that involves both qualitative and quantitative evaluation. To quantify the overall rating for each supplier, SourceSage applies a Supplier Risk Rating model to provide a standardized index for comparison of suppliers. TheSupplier Risk Rating can also be shown against each of the supplier’s products.
Phase 4: Inclusion in SourceSage Supplier Directory. The final step of the onboarding process is to enable the supplier in SourceSage supplier directory. Doing so, will allow SourceSage to issue purchasing orders to the supplier, receive invoices and make payments to the supplier. The following will take place to allow the supplier to fully participate in the procurement eco-system:
a. Upload supplier’s catalogue to SourceSage procurement platform. The catalogue has been processed to be compliant with Open Catalogue Interface (OCI) format and product classification according to United Nations Standard Products and Services Code (UNSPSC).
b. Link to procurement platform. The supplier’s catalogue becomes visible in the MNC procurement platform. This will allow all procurement activities by the MNC staff to be tracked and routed through the internal approval workflow.
c. Provision of payments terms. As the relationship strengthens with each procurement activity, SourceSage and the supplier will negotiate for mutually beneficial payment terms.
With each procurement activity, SourceSage will monitor the performance of each supplier, identify and assess supplier’s risks, provide feedback to the supplier and collaborate to improve the process, and to develop the relationship further to deliver greater customer satisfaction, lower costs, reduced risks, better quality and achieve greater efficiency. This will be dealt with in a follow article.
For more information, please email us at compliance@sourcesage.co