Why existing Supplier Portals need a Complete Rethink
Supplier Portals or Vendor Portals perform an essential function in today’s supply chain. Yet, there is hardly any discussion around their implementation when we have conversations around digitalization aimed at improving supply chain agility and resilience.
In our experience with global enterprises at the forefront of their industries, decision-makers acknowledge that there is a need to link ongoing conversations with suppliers and contract manufacturers back to their respective ERPs. Because taking this first step to unify and establish an effective communication with suppliers is critical to preventing problems with order fulfilment.
What are Supplier Portals?
Simply put, supplier portals are platforms or systems that suppliers can log into to receive orders from their customers (manufacturers, distributors, or brands) and were originally designed to exchange order information between organizations and suppliers.
Organizations would rely on phone conversations, spreadsheets, emails, and site visits to manage their supplier relationships before supplier portals existed. The supply chain is at risk if all of that communication is managed by people relying on a fragmented set of tools. It could take weeks to resolve issues if a buyer forgets to send a purchase order to a supplier after the ERP generated it. A supplier’s unintentional deletion of an email containing a revision to an order might cause the entire transaction to be delayed. To reduce the possibility of human errors and provide the concerned procurement professionals with a more effective tool than email to manage their orders, businesses started looking to supplier portals.
However, most standard off-the-shelf solutions fail to fully account for the dynamic nature of procurement order cycles:
- Tools are not truly collaborative
Many supplier portals connected to the ERP are designed with an assumption that suppliers will be able to fulfill the orders as they are placed without any issues. However, that is not the reality, orders change all the time after issuance. Often, suppliers can’t use the portal to communicate these changes relating to ship dates, quantity or price. In some cases, we have seen that suppliers are required to share the expiration date of the stock and get an approval from the buyer organization before shipping. In such situations, suppliers resort to email and phone calls rendering the supplier portal only partially useful. While there are some portals that allow suppliers to make changes to an order, they don’t go through the approval process with different stakeholders on the supplier and buyer side before updating the connected ERP system.
2. Supplier has to manage different portals at the same time
The successful adoption of any new supplier portal is as low as 50% because suppliers have to deal with multiple portals from different customer organizations. They have to fill out the same information over and over to cater to the specific onboarding requirements of different enterprises. Most issues occur because standard vendor portals are an add-on to the buyer-side ERP system and are not really designed to aid one portal connecting with different customer ERP systems. We have found that only 10% of vendor data is reliable, leading to enormous risk and a lack of trust within the system.
3. They fail to account for approval workflows
Even when suppliers can make changes to an order, these modifications still need to be ratified or approved on the manufacturer’s end. If a modification request is left hanging for the lack of requisite approvals by a buying manager or if a notification doesn’t get through on time, employees quickly revert to old-fashioned methods of managing relationships, via calls, emails and Excel sheets. Because of these communication gaps, employees find that the standard vendor portal is useless for nearly half of all orders leading to the most ambitious plans for digitalization to be abandoned, midway.
4. They do no track supplier performance on key metrics
Supplier portals aim to help cut down on manual processes and to provide a secure, transparent source of truth for order management. However, they are not really designed to track key supplier metrics related to fulfillment (like OTIF — On Time in Full), quality and compliance. Most of them do not have scorecards to evaluate supplier responsiveness and order acknowledgement rates.
5. They are not linked to AP (Accounts Payable) automation
A purchase order cycle is complete when the accounts payable team makes the payment after matching the supplier’s invoice against POs and goods/services receipt notes. This manual 3-way match is a time-consuming process as different invoice formats with multiple line items have to match against POs and GRNs. It becomes even more cumbersome to reconcile if there are part shipments on a PO or multiple POs clubbed into a single invoice. We have seen organizations delaying payments by 30–60 days due to reconciliation struggles by their accounts payable team which eventually affected their relationship with suppliers.
Unified Web3 portal for collaborating with trade partners
ParamNetwork has developed a modern-day supplier portal that sits between an organization’s ERP and its supplier base to manage transactions end-to-end, from the time an order has been issued till the time the invoice is paid. Our thin client solution uses the latest Web 3.0 tech stack making our vendor portal one-of-a-kind offering the following advantages:
- Two-way communication with suppliers and buyers with prompts to convert messages to update order quantity, prices, ship date etc
- Low code workflow builder to capture the approval process at both the supplier side and buyer side for any changes made in the order
- Superior integration directly with ERP on either sides for establishing a single source of truth, error-free operations and improved efficiency
- Real-time updates on all transactions and the same data made visible to other side parties on the changes to the accounts ledger
- Digital empanelment of suppliers and near 100% accurate vendor master data
- Automated reconciliation and 3-way matching reducing dispute rates by 95%
In part two of this article, we will explain how the ParamNetwork unified Web3 portal addresses common challenges and offers a truly connected experience so both enterprises and suppliers can derive value from exchanging information, in real-time.
