Leveling Up from Tools to Systems: A Holistic Approach to Third Party Management
It feels like an understatement to say that the evolution of technology continues to reshape and revolutionize business, as it continues to transform industries, individual companies within them, workers at all levels and the work they carry out. With the advent of AI, and especially generative AI within that broader term, and the continued globalization of supply chains, the pace of change has sped up, forcing businesses and workers to adjust quickly.
For procurement professionals, keeping pace with new technology and understanding the changes that come with it – while adapting their systems and workers – is crucial if they want to stay competitive in today’s fast-paced, unpredictable global economy.
Another part of the equation is figuring out how to meet complex, ever-evolving business needs that include:
- New environmental, social and governance (ESG) regulations with which their businesses must comply
- Need for supplier diversification which creates a growing and evolving ecosystem of suppliers/third parties
- Increased supplier data reporting requirements
- Ever-present risk mitigation
- Need for faster, more efficient, transparent processes and workflows
Third-party risk management (TPRM) is becoming an imperative as organizations find themselves in a supply chain environment that grows less certain each year. Global crises, whether caused by governmental uncertainty, wars, climate, economic struggles, or other forces, continue to create confusion. And the need to automate and orchestrate the entire vendor and third-party journey from intake and onboarding to evaluation and offboarding only continues to heighten.
To take full advantage of today’s leading technology advancement – AI and GenAI – procurement professionals are adopting solutions that automate workflows and improve overall operations, leading to better day-to-day and long-term strategic business outcomes.
Global interconnectedness
“If you want a resilient supply chain, you’re going to need to deal with companies from all over the world. It’s no longer good enough to focus on just one area. While that is an overall positive, it does come with certain challenges,” said Nikhil Gaur, research analyst at Spend Matters.
Working within a resilient global supply chain results in complexities around basic matters like communication, time zones and languages, along with more challenging aspects like risk management, compliance and sustainability. “Using third-party management software makes it so much easier because you can connect with people in real time and remain updated, regardless of location. That alone increases efficiency,” he continued.
The regulations, laws and other compliance issues that come with a wider supply chain create special concerns for procurement, especially around ESG, carbon emissions and modern slavery. “Software that is very flexible and configurable can be adapted to so many different use cases and make managing all of the local, regional, national and international regulations easier,” Nikhil added.
Beyond traditional third-party management
The pitfalls that stem from using traditional siloed tools, disconnected teams, information systems and processes for third-party management often result in poor internal and external communication and can introduce unacceptable levels of risk.
“It’s essential to be in regular communication across a company’s departments, especially when the work is global,” he continued. “Companies benefit when they align processes and run their procurement operations using a more holistic approach for the supplier management lifecycle.
“While orchestrating the supplier/third-party risk management lifecycle is currently addressed by many suite providers, many businesses are finding their needs better addressed by dedicated cross-functional specialist vendors.”
Third-party risk management through a specialized vendor moves beyond the onboarding and intake process. The software can regularly check with suppliers to make sure their compliance is ongoing, not just monitored at a few fixed points in time. This helps companies adhere to existing guidelines and be aware of potential risks before they emerge. That added benefit helps procurement meet its tactical metrics and stay aligned with overarching strategic goals.
From siloed tools to unified process orchestration
Isolated tools that originally helped companies organize and track operations gave way to automated procurement systems, which are now beginning to be nudged out by specialized third-party platforms that create a unified experience for internal and external stakeholders.
A significant difference of a unified system that provides third-party alignment is the real-time end-to-end visibility it provides to allow for more effective risk monitoring. This visibility through a single lens, where everything is consolidated into one system with automated checks, flags and workflows, means that if or when anything goes off track, they can be easily identified and fixed before they become a major problem. The ability to collect and analyze primary data, integrated with independent real-time data, is, according to Nikhil, “more ideal in a climate like we have today which adds regulations and requirements at so many levels.”
For companies, these systems can become the digital cornerstone of their procurement operations. Communications and visibility are enhanced at every level of third-party relationships, leading to unified systems for managers, business requestors, vendors, partners and clients.
Integrated AI is improving data collection, analysis, application and overall transparency. AI is also driving improvements across compliance and risk; there are powerful implications with regard to efficiency, cost reduction, optimization and the health of an organization’s third-party network.
AI-powered ‘third-party operating systems’
“AI is a key differentiator creating fundamental shifts for procurement teams,” Nikhil continues. “The technology helps generate predictive and prescriptive insights that can be especially useful, as it can improve overall outcomes for procurement professionals who oftentimes lack resources and staff.
“The foundational goals of most procurement teams are the essentials – cutting costs and being efficient. By automating basic processes using AI, procurement can meet those core requirements with better accuracy, faster results and less manual effort.”
Beyond that, AI embedded into third-party management platforms benefits supplier management, sourcing, master data management, contract management, and more. When AI is integrated into workflows, the process becomes more user-friendly and agile. Some even go beyond no-code or drag-and-drop interfaces, using natural language interfaces trained on the company’s own data that create unique workflows based on words typed into the query field.
AI-powered third-party management platforms are changing the way procurement teams face today’s global supply chain challenges at every level. Find out more about the future of AI-enhanced third-party management here.
Leveling Up from Tools to Systems: A Holistic Approach to Third Party Management
It feels like an understatement to say that the evolution of technology continues to reshape and revolutionize business, as it continues to transform industries, individual companies within them, workers at all levels and the work they carry out. With the advent of AI, and especially generative AI within that broader term, and the continued globalization of supply chains, the pace of change has sped up, forcing businesses and workers to adjust quickly.
For procurement professionals, keeping pace with new technology and understanding the changes that come with it – while adapting their systems and workers – is crucial if they want to stay competitive in today’s fast-paced, unpredictable global economy.
Another part of the equation is figuring out how to meet complex, ever-evolving business needs that include:
- New environmental, social and governance (ESG) regulations with which their businesses must comply
- Need for supplier diversification which creates a growing and evolving ecosystem of suppliers/third parties
- Increased supplier data reporting requirements
- Ever-present risk mitigation
- Need for faster, more efficient, transparent processes and workflows
Third-party risk management (TPRM) is becoming an imperative as organizations find themselves in a supply chain environment that grows less certain each year. Global crises, whether caused by governmental uncertainty, wars, climate, economic struggles, or other forces, continue to create confusion. And the need to automate and orchestrate the entire vendor and third-party journey from intake and onboarding to evaluation and offboarding only continues to heighten.
To take full advantage of today’s leading technology advancement – AI and GenAI – procurement professionals are adopting solutions that automate workflows and improve overall operations, leading to better day-to-day and long-term strategic business outcomes.
Global interconnectedness
“If you want a resilient supply chain, you’re going to need to deal with companies from all over the world. It’s no longer good enough to focus on just one area. While that is an overall positive, it does come with certain challenges,” said Nikhil Gaur, research analyst at Spend Matters.
Working within a resilient global supply chain results in complexities around basic matters like communication, time zones and languages, along with more challenging aspects like risk management, compliance and sustainability. “Using third-party management software makes it so much easier because you can connect with people in real time and remain updated, regardless of location. That alone increases efficiency,” he continued.
The regulations, laws and other compliance issues that come with a wider supply chain create special concerns for procurement, especially around ESG, carbon emissions and modern slavery. “Software that is very flexible and configurable can be adapted to so many different use cases and make managing all of the local, regional, national and international regulations easier,” Nikhil added.
Beyond traditional third-party management
The pitfalls that stem from using traditional siloed tools, disconnected teams, information systems and processes for third-party management often result in poor internal and external communication and can introduce unacceptable levels of risk.
“It’s essential to be in regular communication across a company’s departments, especially when the work is global,” he continued. “Companies benefit when they align processes and run their procurement operations using a more holistic approach for the supplier management lifecycle.
“While orchestrating the supplier/third-party risk management lifecycle is currently addressed by many suite providers, many businesses are finding their needs better addressed by dedicated cross-functional specialist vendors.”
Third-party risk management through a specialized vendor moves beyond the onboarding and intake process. The software can regularly check with suppliers to make sure their compliance is ongoing, not just monitored at a few fixed points in time. This helps companies adhere to existing guidelines and be aware of potential risks before they emerge. That added benefit helps procurement meet its tactical metrics and stay aligned with overarching strategic goals.
From siloed tools to unified process orchestration
Isolated tools that originally helped companies organize and track operations gave way to automated procurement systems, which are now beginning to be nudged out by specialized third-party platforms that create a unified experience for internal and external stakeholders.
A significant difference of a unified system that provides third-party alignment is the real-time end-to-end visibility it provides to allow for more effective risk monitoring. This visibility through a single lens, where everything is consolidated into one system with automated checks, flags and workflows, means that if or when anything goes off track, they can be easily identified and fixed before they become a major problem. The ability to collect and analyze primary data, integrated with independent real-time data, is, according to Nikhil, “more ideal in a climate like we have today which adds regulations and requirements at so many levels.”
For companies, these systems can become the digital cornerstone of their procurement operations. Communications and visibility are enhanced at every level of third-party relationships, leading to unified systems for managers, business requestors, vendors, partners and clients.
Integrated AI is improving data collection, analysis, application and overall transparency. AI is also driving improvements across compliance and risk; there are powerful implications with regard to efficiency, cost reduction, optimization and the health of an organization’s third-party network.
AI-powered ‘third-party operating systems’
“AI is a key differentiator creating fundamental shifts for procurement teams,” Nikhil continues. “The technology helps generate predictive and prescriptive insights that can be especially useful, as it can improve overall outcomes for procurement professionals who oftentimes lack resources and staff.
“The foundational goals of most procurement teams are the essentials – cutting costs and being efficient. By automating basic processes using AI, procurement can meet those core requirements with better accuracy, faster results and less manual effort.”
Beyond that, AI embedded into third-party management platforms benefits supplier management, sourcing, master data management, contract management, and more. When AI is integrated into workflows, the process becomes more user-friendly and agile. Some even go beyond no-code or drag-and-drop interfaces, using natural language interfaces trained on the company’s own data that create unique workflows based on words typed into the query field.
AI-powered third-party management platforms are changing the way procurement teams face today’s global supply chain challenges at every level. Find out more about the future of AI-enhanced third-party management here.
