The Surprising Truth About Your Supplier Data: Over 60% of It Could Be Worthless
Supplier data is the foundation of any successful supply chain management strategy. Decisions affecting billions of dollars worldwide are made every day based on supplier data. But what if your supplier data is not as reliable as you think? What if most of it is inaccurate, needs to be updated, or is irrelevant? As you’ll learn today, this is true for many large corporations.
How AI helped us uncover bad supplier data
At BabelusAI, we are passionate about helping our clients improve their supplier data quality and visibility. One of our clients, a global leader in the automotive industry, asked us to audit one of their in-house databases of approximately 800 suppliers in the transport category. They wanted to know how accurate and complete their supplier data was and how they could improve it.
A shocking revelation
Having worked in procurement for large corporations for years, I expected to find some bad data to clean up, but what we discovered shocked us!
After running our AI-powered tool Insight360 on our client’s database, they discovered that only 300 suppliers were unique vendors offering transportation services.
In other words, out of 800 suppliers in our client’s database, around 500 were either inactive, out of business, belonged to different categories, or were duplicates. This implies that over 60% of the data (almost two-thirds!) was worthless.
Bad supplier data is more common than you think
You may think:
“That’s just bad supplier data management on their part. We don’t have that problem. We’re fine!”
To be fair, that may be true. But it is also possible that you are overlooking potential problems with your supplier data. A recent survey by HICX showed that 53% of businesses considered their supplier data to be of “very good quality” and in the “top 20% of their industry.”
But how can 53% of businesses be in the top 20%? It is obvious that, at least for some companies, supplier data is not as good as they think.
Furthermore, Experian reports that 88% of businesses see an average negative impact of inaccurate data on their bottom line above 12%, proving the problem is widespread.
The hidden costs and risks of bad supplier data
Knowing how good your supplier data is is critical, as bad supplier data can pose severe financial and operational costs to your business.
Bad supplier data can:
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Why large supplier databases are frequently full of bad supplier data
The statistics outlined above, show a problem with supplier data quality in large organizations. The natural question is, why? Here are three reasons:
#1 Manual data entry and updates
When supplier data is collected and updated manually, such as through emails, spreadsheets, or questionnaires, it is prone to human errors, inconsistencies, and delays. Many Chief Procurement Officers in large corporations struggle with mastering the digital complexity of automating these processes.
#2 Procurement professionals’ limited technical background
In a previous article , we discussed how most professionals in procurement have backgrounds in marketing, business, or supply chain management. Only a handful have a background in science or engineering, hindering their ability to understand a supplier’s technical datasheets and assign them to the right category.
#3 Lack of data standards and oversight
The report by HICX I mentioned earlier also showed that a surprising 89% of senior procurement professionals admitted they don’t have total oversight of their supplier data. When supplier data is not governed by clear and consistent standards, policies, and procedures, or when they are but there is insufficient oversight, mistakes are bound to happen.
AI can reveal bad supplier data in seconds
As you can see, bad supplier data is a serious problem you must address as soon as possible. But how can you do that without spending a fortune or wasting a lot of time? The answer is Insight360 .
Insight360 is a revolutionary platform that uses generative AI to analyze, clean, and enrich your supplier data in minutes. With Insight360, you can:
What makes Insight360 different
Contrary to what some people believe, generative AI-powered tools like Insight360 are not chatbots or simple conversational AIs.
Insight360 uses a personalized large language model (LLM) that is custom-trained with human feedback from industry experts for a specific task. That task is analyzing and understanding supplier information within an industry and structuring it in valuable ways.
Contact us today to discuss how BabelusAI can help you discover and clean bad supplier data in minutes, or schedule a call now to discuss developing a pilot for your company at no cost.
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9 个月Luis, that's a great success case on how your Insight360 platform helped overcome the problem with bad supplier data to enhance the company’s performance indicators. I actually see a good synergy here between BabelsAI and my firm.