Supplier enablement
Encyclopedia
Supplier Enablement is the process of electronically connecting suppliers (or other trading partners) to a company's supply chain
. Supplier enablement is achieved when suppliers of goods and services are connected to a company's back-office systems to exchange critical business documents such as purchase orders, invoices and other information. Suppliers can be connected, or "enabled," using a variety of means including Electronic Data Interchange
(EDI), Extensible Markup Language (XML
), Web forms or other e-commerce tools.
The benefits of supplier enablement include reduced supply chain costs, improved invoice tracking, reduced procurement costs, reducing or eliminating non-value added (manual) processes, and improved communications. Supplier enablement extends the value of a company's internal IT investments, such as ERP
, into their trading communities—expanding the ROI on an initially internal investment.
Purchasing Card (Pcard) Supplier Enablement
As more companies move purchasing card
into A/P to replace checks and other forms of payment, purchasing card supplier enablement will become key to the success of the payment conversion project. As stated on the purchasing card
stub, every supplier must be contacted and informed of the payment change from check to the purchasing card, even if the supplier is already a purchasing card supplier. Depending on the pcard payment type selected, information is required from the supplier before a client can move forward with the payment conversion. Some banks offer help in the payment conversion process and other software companies provide technology to make the conversion efficient and easy for the financial institution, client, and supplier.
Financial institutions and the associations provide payment technology allowing clients to process push pcard payments to the suppliers or send the suppliers a pcard remittance advice. The bridge to take advantage of the payment technology is pcard supplier enablement. Every supplier must buy-in to the process and provide remittance advice information, i.e. email address, or other information for push payments (buyer initiated payments).
Carol Benson of Glenbrook Partners discusses this payment change and supplier enablement in her November 1, 2007 article, eB2B at the Tipping Point?. Excerpts from the article follow.
I found four new forces at work [at the AFP (Association for Finance Professionals) conference] that I believe are significant.
In summary, here’s what I expect to see over the next few years for B2B payments:
Supply chain
A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to...
. Supplier enablement is achieved when suppliers of goods and services are connected to a company's back-office systems to exchange critical business documents such as purchase orders, invoices and other information. Suppliers can be connected, or "enabled," using a variety of means including Electronic Data Interchange
Electronic Data Interchange
Electronic data interchange is the structured transmission of data between organizations by electronic means. It is used to transfer electronic documents or business data from one computer system to another computer system, i.e...
(EDI), Extensible Markup Language (XML
XML
Extensible Markup Language is a set of rules for encoding documents in machine-readable form. It is defined in the XML 1.0 Specification produced by the W3C, and several other related specifications, all gratis open standards....
), Web forms or other e-commerce tools.
The benefits of supplier enablement include reduced supply chain costs, improved invoice tracking, reduced procurement costs, reducing or eliminating non-value added (manual) processes, and improved communications. Supplier enablement extends the value of a company's internal IT investments, such as ERP
Enterprise resource planning
Enterprise resource planning systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application...
, into their trading communities—expanding the ROI on an initially internal investment.
Purchasing Card (Pcard) Supplier Enablement
As more companies move purchasing card
Purchasing card
A purchasing card is a form of company charge card that allows goods and services to be procured without utilising a traditional purchasing process...
into A/P to replace checks and other forms of payment, purchasing card supplier enablement will become key to the success of the payment conversion project. As stated on the purchasing card
Purchasing card
A purchasing card is a form of company charge card that allows goods and services to be procured without utilising a traditional purchasing process...
stub, every supplier must be contacted and informed of the payment change from check to the purchasing card, even if the supplier is already a purchasing card supplier. Depending on the pcard payment type selected, information is required from the supplier before a client can move forward with the payment conversion. Some banks offer help in the payment conversion process and other software companies provide technology to make the conversion efficient and easy for the financial institution, client, and supplier.
Financial institutions and the associations provide payment technology allowing clients to process push pcard payments to the suppliers or send the suppliers a pcard remittance advice. The bridge to take advantage of the payment technology is pcard supplier enablement. Every supplier must buy-in to the process and provide remittance advice information, i.e. email address, or other information for push payments (buyer initiated payments).
Carol Benson of Glenbrook Partners discusses this payment change and supplier enablement in her November 1, 2007 article, eB2B at the Tipping Point?. Excerpts from the article follow.
I found four new forces at work [at the AFP (Association for Finance Professionals) conference] that I believe are significant.
- Card payments for A/P purchases – this is by far the biggest news.
- A new attitude towards accounts payable outsourcing - suddenly, the term “outsourcing Accounts Payable” seems to come tripping off of many tongues, without stumbling – it’s beginning to sound like the obvious, right thing to do.
- A new life for the supplier network concept – remember when we said above that supplier sign-up was one of the core problems? The proposition? Any supplier who signs up with the network to receive payments from one buyer can easily expand that to multiple buyers.
- The final factor is the least exciting, but possibly the most significant – new progress on remittance data standards.
In summary, here’s what I expect to see over the next few years for B2B payments:
- A dramatic shift in volume from check (and sometimes, from ACH) to card based A/P payments
- The formation of three to six major supplier networks.
- An acceleration of suppliers’ willingness to be paid driven by the ability of accounting software to accept and integrate more standardized remittance data