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How data silos undermine the distributor quoting process and why it needs to be fixed!

“A sourcing or tender process is used to select the best product or service for a certain category of expenditure. Unfortunately, lots of these processes are not run well, resulting in loss of large savings opportunities, delivery of poor-quality products, or less favorable terms. – Sourcing Process, Procurement Academy

I remember the days of the dog-eared Industrial supplier journals – mine was the Thomas Register, with folded corners, paper-clipped pages, and different color post-it notes sticking out from countless pages like they were index dividers.

Like the notebook belonging to a chief scout for a professional sports team containing the names of top prospects, or a chef’s cookbook with (secret) recipes, I guarded my version of a purchasing black book as if it held the launch codes to the country’s nuclear arsenal.

It wasn’t that I was worried that I would somehow be less valuable to my company if the information ever became general knowledge to my peers and management – although, for some purchasing pros, this was at least a mild concern. Nor was I being intentionally selfish by holding back important sourcing information. For me, it was a matter of pride in the fact that I had, over time, cultivated good pricing information and strong relationships with my suppliers to deliver maximum value to my company.

Of course, at that time, automation or the digital transformation of the supply chain wasn’t even a faint concept beyond the use of spreadsheets on my desktop 8086 IBM PC. However, old habits that have been “ingrained” over decades and even years, are hard to change.

As we move into the digital era when computing and procurement take place beyond the cloud at the edge, these habits become increasingly problematic.

Trust, But Verify

When I first began my research for this article, I almost fell prey to the following quote (or misquote), which is erroneously attributable to both Peter Drucker and W. Edwards Deming; “you can’t manage what you can’t measure.”

But for the fact that I am a stickler for details, I might have taken you down an errant road in which I would tell you how keeping information to yourself such as that which I held so near and dear in my Thomas Register journal was hurting your organization.

I would also suggest that neither you or your company could determine the value of your work as there was no opportunity to analyze it in the context of the overall performance of the purchasing department as a whole. Again, all reasonable points to consider.

But neither Deming nor Drucker said it.

In truth, and as explained by Don Peppers, whose article Why “You Can’t Manage What You Can’t Measure” is Bad Advice, “Measuring something doesn’t make it manageable. It makes it measurable.”

He then goes on to say that “in our increasingly data-driven world, we often put too much confidence in numbers and algorithms, to the point that it can and does corrupt our thinking.” He then proceeds to provide a compelling case example to support his position.

While I will leave it to you to read the case example – and you should, what Deming, Drucker, and Peppers are saying is that having meaningful data is critical to a businesses’ success, but only when you view it through a lens of experience and common sense. This last point is the main point of this article. Specifically, by having all buyers share their experience, knowledge, and information, you are not just surrendering pieces of paper with numbers on them, because you are part and parcel to the data you gather and share continuously.

It is not until you reach this point of understanding on the front lines that your distribution organization will move beyond a segmented and partial view of their supplier landscape to provide customers with an RFP response that reflects the best value regarding cost, quality, and delivery.

Data Ready = Digital Ready

Once you have the mindset that sharing data in conjunction with your expertise is a good thing, you will help your organization to create an enterprise-wide data pool that is quickly and easily accessible by everyone. In short, you will be a “data ready” organization and, therefore, better positioned to implement a digital strategy for your quoting process that will encapsulate all relevant information to deliver maximum value to ALL stakeholders.

And it is only then that a “true” transformation of the business will take place.

   Jon Hansen, a two-time Ernst & Young Entrepreneur of the Year Finalist, is Chief Editor of Procurement Insights.  He writes for numerous publications globally on a variety of topics, including supply chain and logistics, government policy, emerging technology, and social media.

In July 2019, he was named a Top 20 Thought Leader On Procurement by thinkers 360 and is a much sought after speaker and expert panelist.

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