Fortune 500 companies manage trillions of dollars in spend each year. Despite this, many haven’t allocated budget for one of their greatest problems, sourcing and management of indirect procurement suppliers like professional service providers and marketing agencies.
Instead, most of Fortune 500 are still using spreadsheets for sourcing and annual assessments. When you have ten or twenty service suppliers, this might be okay. But, when you have hundreds or thousands of services providers, these outdated methods waste time, introduce risk, and end up costing corporations on many fronts.
At SpotSource, we are modernizing supplier evaluations and transforming the services supply chain.
Rethinking Supplier Annual Assessments
According to a study by the advisory service CEB, managers are already spending five weeks doing employee evaluations.¹ With all those hours wasted on employee assessments, managers are struggling to find time to spend on service supplier assessments. And, with all the duties managers are tasked with this can lead to an even greater problem: creating reviews reliant on their memories.
We all know relying on memory introduces bias, where often the last thing you delivered will be what most of the assessment is based on. But, most Fortune 1000 companies that do supplier assessments only do them for the partners the spend the most with. That may mean only 10 or 20 suppliers out of a roster of more than a thousand. That doesn’t paint a good picture for the health of the services supplier management.
Unfortunately, this same outdated process is being used by marketers and other professionals all across the globe when a company reviews a service provider that they’ve worked with, whether that is a marketing agency assessment, one for an external manufacturing partner, or another group of service providers.
Forced to Rely on Memories
As humans we struggle to remember what we ate for our last meal, yet, we somehow expect marketers and other professionals to remember every result a supplier has provided us over the last 12 months. It’s not realistic.
This leads to professionals to develop assessments based off of memories alone and the supplier’s last month of work is frequently what is actually being reviewed.
It leads to people putting off doing the assessments or scrambling at the last minute to just check the box that they did it. Not to mention all the time wasted trying to chase people down for input.
Unfortunately, all of this adds up to wasted time, energy, and poor data that costs companies money. We’ve seen it numerous times where a company once again finds itself selecting the wrong partner or overpaying for work with a less-than-adequate supplier.
Frequent Reviews Beat Annual Assessments Every Time
Not only is the annual review process outdated, but so is the location many companies store this information. It’s crazy to think that a Fortune 500 company would use something as old school as an Excel spreadsheet to keep track of their suppliers, but for many large brands this is just the reality.
“I couldn’t believe it was 2019, and we were still looking at a spreadsheet, trying to connect the creative brief with an agency name without any context on who was actually a good fit. Agency Spotter solved that, and I’m super excited about how this helps our transformation.”– VP Marketing Operations at a Fortune 100 Company
Just as the VP above mentioned, these spreadsheets do not have the right data to drive solid decision making. Changing that should be a fundamental call from all marketing departments as well as those who oversee other professional services across complex enterprise ecosystems.
On top the “name on a spreadsheet” issue, annual assessments end up being just a number that is disconnected from the final assessment document. So, without any context, employees continue to struggle to make the best decisions for their company. A new budget holder may see a high evaluation score, but it isn’t clear whether they were being judged for the services needed.
It’s nearly impossible for employees to succeed if they aren’t given adequate tools and the data to make the best decisions.
Empowering Employees With Data Benefits Companies
There’s no denying that a spreadsheet is an archaic way to track crucial information. However, one of the most shocking facts of this scenario is that many times the spreadsheet is just floating around the office. And, more often than not, only certain employees have access to it. There’s no central place that employees know to go to get the latest, up to date information.
Research conducted in 2019 by Gartner showed that helping employees understand how their work connects to the goals of others and the company can improve performance by up to 10%. The study highlighted that in order for this to occur, employees need to be provided with information that would help them actively engage with corporate strategy.²
The harsh reality is that employees can’t be empowered if they aren’t given the proper tools and data. Even when a company has some of the data in a system like Ariba, most decision makers don’t have access or the knowhow to search these systems. Plus, most of the contextual data they need to decide on the right services supplier isn’t in Ariba.
Do Smaller Assessments, More Often
The answer to empowering your employees begins with doing better assessments. At SpotSource, we have implemented quick reviews that can become a more accurate building block for an annual assessment.
The SpotSource Platform allow employees to continuously review their suppliers’ work. As a result, it pushes the best suppliers to win more business within a company in a more accurate and unbiased manner.
It also allows for course correction by companies or by suppliers as problems occur versus waiting until the next annual assessment period. And, in doing so, it helps to quickly identify underperformers that may not belong in your supplier ecosystem.
Give Employees One Place To Access Supplier Data and Make Better Decisions
In a large enterprise, knowing where to look for information is half of the battle. The other half is having the right data stored in a searchable format.
It is crucial for all companies to have a way to keep track of their service providers and all the nuanced data that drives better decision making. SpotSource was designed to do just that. By trading in the outdated Excel sheets for SpotSource, you digitize and operationalize service provider data across the enterprise. This empowers decision makers across the company, it unifies data from different systems like Ariba and Aravo, and brings critical new data like reviews to the forefront of the decision making process.
Make it easy for everyone to search, engage, and manage suppliers with one secure cloud solution, SpotSource.
References:¹ Harvard Business Review | ² Gartner