In the conversations today about digital transformation, supply chain agility, and organizational resilience, talk of supplier portals is conspicuously muted. Difficult to get up and running and often linked to a single ERP, the supplier portals of yore are not widely considered to be solutions for the problems of the future.
And yet, there’s no denying that there’s a need for a portal-like technology—something to link ongoing conversations with suppliers and contract manufacturers back to an organization’s ERP.
As Tom Kieley, SourceDay’s CEO, said in a recent webinar, “All the last-mile automation in the world can’t help you if you have problems in the first mile.” Put simply, if your organization doesn’t get the parts it needs on time, it doesn’t matter what other fancy tools you put in place. And communicating with suppliers is paramount to fulfilling orders.
So the question remains: Does your organization need a supplier portal? And if not, what does it need to address supplier performance?
What is a Supplier Portal?
When most people talk about supplier portals (also sometimes called vendor portals), they’re referring to systems that suppliers will log into to receive orders from their customers, usually manufacturers, distributors, or CPG brands. Many ERPs offer their own supplier portal product, so that purchase orders created in its ERP can be sent automatically to suppliers.
Suppliers may also use the portal to communicate back to their customers. If they can’t meet an order for one reason or another, they may submit changes to the ship date or quantity through the portal.
It is, in theory, a centralized location where organizations and their suppliers can exchange relevant information about orders.
Benefits of a Supplier Portal
Because direct procurement is inherently trickier to manage than indirect procurement, many supply chain professionals put more stock in themselves than technology, opting to manage supplier relationships through channels like phone calls, spreadsheets, emails, and site visits.
Yet relying on people to manage all that communication exposes your supply chain to risk. If a buyer forgets to send a purchase order to a supplier after it was generated by the ERP, it could be weeks before the problem is identified. If a supplier accidentally deletes an email with updated artwork, it could put the whole order behind schedule.
That’s why companies began looking to supplier portals—to help eliminate the risk of human error and to give the procurement professionals involved a better tool than email to manage their orders.
And that’s the number one benefit of a supplier portal. Its aim is to help cut down on manual processes and to provide a secure, transparent source of truth for order management.
In practice, however, most supplier portals lack some key functionality to achieve these goals. Here are a few ways the supplier portals on the market tend to fall short.
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Problem 1: They’re Not (Really) Collaborative
Many of the supplier portal solutions on the market are surprisingly one-sided, usually with purchase order data from the ERP flowing through to suppliers only. While this speeds up one step in the procurement process, it assumes that suppliers will be able to fulfill those orders without issue.
The reality, as we’ve discovered through research, is that orders will change about 40% of the time between when they’re issued and when they’re received. So if suppliers can’t communicate in real time through the portal to let your organization know that they can’t meet your ship date or that the price has increased, they’ll opt for email or phone calls. This, in turn, renders your supplier portal useless for nearly half of all orders.
Some solutions do allow suppliers to make changes to an order in the portal experience, but they often won’t go through an approval process with internal stakeholders. The ERP is updated, but the buyer hasn’t signed off on (or in some cases even been notified of) the change.
Problem 2: They’re Usually ERP Specific
More often than not, supplier portals are tied to specific ERPs. On the surface, this seems highly convenient. The ERP houses your supplier information, and if it can connect your demand planning engine to your supplier network, it’s one less step to take.
In today’s world, however, it’s common for large organizations to use a few different ERPs. Whether you’ve acquired a new company recently or have independently-operating facilities, it’s very possible that you’ll wind up managing multiple ERP systems—if you don’t already. And if you’re using the same supplier base, asking them to log into different portal experiences can be confusing.
Not to mention, functionality is limited. ERPs perform a specific function and have shown little interest in truly branching out into supplier collaboration.
Problem 3: Suppliers Have Too Many Portals
Speaking of suppliers, don’t forget that they have to juggle ordering preferences of all of their customers—not just you. One of the biggest concerns organizations have when adopting new portal technology is that their suppliers simply won’t use it. Because they have too many portals to manage every day, they’ll default to email.
This problem extends beyond simply launching a supplier portal. Once it’s up and running, someone on your team has to do the work of onboarding new suppliers. The vast majority of supplier portals don’t offer any managed services focused on onboarding, training, and encouraging use by suppliers, leaving a lot of work on your team’s plate.
Problem 4: They’re Not Focused on Supply Chain Performance
Supplier portals are intended to make the process of sourcing materials more streamlined. And while they may cut out some steps that would otherwise be performed by people, they’re rarely focused on the big picture of improving your supply chain’s performance.
If they were, they’d include things like dynamic supplier scorecards showing important metrics like responsiveness, PO acknowledgement rates, and of course on-time delivery. Supply chain management is about much more than issuing purchase orders—it’s about ensuring your team has the right materials at the right time so that operations can function as efficiently as possible.
How Chatsworth Products Manages Suppliers
And why they ditched their last supplier portal.
Problem 5: Supplier Portals Fail at AP Automation
An order isn’t complete until it’s been received and the invoice has been paid. It would make a lot of sense to utilize portal technology for this final step, creating a standardized payables process where invoices are uploaded into the portal and then fed to the ERP. After all, all the information you need to pay invoices quickly should have been captured in the portal.
The reason accounts payable processes are so hard to automate for PO-driven transactions is their complexity. Blanket orders, for example, complicate payable workflows. Split shipments make it hard to match the invoice with the original purchase order. Each purchase order may contain dozens of lines, and each invoice may contain lines from dozens of purchase orders. And don’t forget that 40% of orders will have changes by the time the invoice is sent. It’s a logistical nightmare for AP professionals.
But there’s hope. If supplier portals lived up to everything they could be, this process really would be automated. If every order, change request, and PO line were captured by technology, it wouldn’t be so cumbersome to perform three-way invoice matching. It might even allow companies to improve supplier relationships and take advantage of early payment discounts.
Why SourceDay Is Different
In the past, we’ve described ourselves as a “modern” supplier portal, but we’re not sure that goes far enough. SourceDay, like a portal, sits between an organization’s ERP and the supplier base.
Unlike traditional supplier portals, communication is two-sided—suppliers can make change requests and buyers can choose to accept, reject, or discuss them. From the day a PO is issued until the invoice is paid, SourceDay allows for a truly collaborative experience.
This is made possible by SourceDay’s focus on line items. Once POs are issued, SourceDay captures the information relating to each line so that suppliers and buyers can discuss individual parts without holding up the whole order. Separating the line from the purchase order makes managing change significantly easier.
It also allows supplier performance metrics to be tracked for the first time. Because each exchange is captured in SourceDay, rather than in emails or spreadsheets, things like responsiveness and acknowledgement rates can be measured, allowing your team to evaluate suppliers on important metrics. We also place intense focus on on-time delivery rates because we understand how important it is to your operations, serving these metrics on supplier scorecards that are updated in real time and are visible to both your team and suppliers.
And have we mentioned that we can automatically match up to 95% of your invoices? That’s something no supplier portal on the market can claim.
If you’re on the hunt for a supplier portal, consider something a little more powerful instead. Talk with a member of the SourceDay team today to find out how we can help your team improve supply chain performance.