**London**: As procurement evolves post-pandemic, parallels with consumer dining decisions emerge. Kodiak Rating proposes a digital rating system akin to Yelp for suppliers, advocating comprehensive profiles to improve supplier evaluations and enhance operational efficiency in procurement processes across industries.
The evolving landscape of procurement has drawn parallels with consumer behaviour, particularly in the realm of dining experiences. As the world gradually navigates its way through the aftereffects of the COVID-19 pandemic, individuals often find themselves engaging in passionate discussions about their next meal, which frequently culminates in an exploration of restaurant options and their respective reviews on platforms such as Yelp.
These instances of personal dining decisions mirror the rigorous supplier evaluations conducted in professional environments. While the stakes and scale may differ dramatically—from choosing a meal at a local Italian market to negotiating multi-million dollar contracts—the underlying processes exhibit notable similarities. The consideration of reviews, performance metrics, and recommendations can be seen as an essential part of both personal and business decision-making.
According to research from Procurement Leaders, a striking number of procurement organisations still rely on makeshift systems to manage workflows and supplier relationships; over 60% operate without any dedicated tools, resorting primarily to improvised solutions such as Microsoft Office and Microsoft Azure. This figure rises to more than 70% for functions pertaining to risk management and category management, highlighting an ongoing reliance on antiquated methods in an industry that is becoming increasingly data-driven.
Inadequate data visualisation and quality often hinder the decision-making capabilities of procurement teams, always leaving one to ponder the critical questions: “Do we truly understand who we are buying from?” and “Why have we chosen these suppliers?” To tackle these concerns, businesses are encouraged to adopt a more sophisticated approach—one that revolves around building comprehensive supplier ratings and profiles.
Imagine if suppliers showcased similar profiles to that of a Yelp page, complete with detailed metrics, ratings, and stakeholder feedback. Such a digital presence would facilitate a 360-degree view of the supplier landscape, allowing procurement teams to make better-informed decisions based on a holistic overview of potential partners.
Kodiak Rating, a supplier management firm, is actively exploring this concept through its innovative methodology aimed at providing deeper insights into supplier performance. The company’s approach is predicated on enhancing the data collection process to ensure that procurement teams possess reliable analytics when assessing their suppliers. By transforming raw data into meaningful insights, organisations can penetrate the complexity surrounding supplier relationships, allowing for the identification of both risks and opportunities within their supply chains.
Central to building a solid supplier rating system is the establishment of clear metrics and expectations, which can often be more intricate than a simple 1–5 star rating system. Defining key performance indicators (KPIs) and behaviour expectations upfront can help firms clarify what constitutes excellent or poor supplier practices. This proactive engagement not only makes the procurement process more transparent but also reinforces communication about performance standards at the inception of supplier relationships.
Kodiak Rating advocates for a four-pronged approach to supplier rating that encompasses risk, resilience, compliance, and performance. Each of these areas features sub-categories that help procure a detailed understanding of supplier capabilities and weaknesses. By collating diverse sources of information—ranging from supplier self-reports to third-party data—organisations can enrich their understanding of potential partners.
The end goal of these initiatives is to enhance operational efficiency in supplier evaluation, enabling procurement teams to shift from outdated analog methods to more agile digital solutions. While many businesses may already be conducting some form of supplier assessment, the emphasis should now be on utilising advanced digital tools to streamline and optimise such processes.
As businesses continue to refine their procurement strategies, the aspiration remains for a modern solution that mirrors the ease and effectiveness of personal decision-making behaviours, reminiscent of user-friendly platforms like Yelp in the digital consumer landscape. Ultimately, a well-structured supplier profile can yield substantial benefits not just in terms of risk management but also in fostering fruitful collaboration between organisations and their suppliers.
Source: Noah Wire Services
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