Written by: Mike Edmunds

Posted on: 28/03/24

Data Governance in Supplier Management

Working in Supplier Management, no matter the industry or the size of your business, data governance and due diligence are imperative to create confidence and assurance in your suppliers and supply chain.

What is Data Governance?

Data governance is the policies, frameworks, systems, and people in place to ensure that data handled in a professional environment is managed consistently, securely, and is of quality. It determines who has access to different kinds of data, as well as which kinds of data are under governance.

Put more simply, it is the act of ensuring that collected data is stored and used appropriately in accordance with a pre-determined corporate policy or framework.

According to Forrester, “The four foundational pillars of data governance are: data policies and procedures that facilitate compliance […] data catalogs and data lineages that enhance data discovery […] data privacy and security that enables data democratization […] data collaboration and sharing that pushes innovation.” – Jayesh Chaurasia, Sudha Maheshwari, Michele Goetz, Gabrielle Raymond, Jen Barton, “Data Governance is the Foundation of Insights-Driven Business”, 5th Feb, 2024 Data Governance Is The Foundation Of Insights-Driven… | Forrester

What is Data Governance in Supplier Management?

Within the context of supplier management, data governance is the process of ensuring that supplier data is handled in a professional and secure manner – but also that the supplier has been properly evaluated against policies and frameworks to ensure suitability and trustworthiness.

For a procurement professional, this means that a supplier who has won a contract has been vetted, ensuring they meet any pre-ordained requirements such as subscribing to a Science Based Target, or being Red Tractor assured. For someone in a quality or technical role, the accuracy of the data becomes much more central to the process. Supply chain professionals will encounter data governance policies in play throughout collaborating with procurement to source the right products and suppliers, to negotiating contracts and risk mitigation. Those who work in compliance will certainly benefit from a strong data governance policy or framework.

Therefore, we see how data governance is intrinsic throughout the supplier management process. There is no role within a business which is not affected in some way by it, and the stronger your policies and supporting frameworks are, the better quality the data will be which will inform decisions and influence the business.

Why Is It Important?

Data governance goes hand in hand with due diligence – investigation or review undertaken to confirm or verify facts of a matter under consideration. Due diligence is important as it acts as a safeguard for a business against potentially negative outcomes of a decision or business agreement. In a procurement and supply chain setting, this would be ensuring that a supplier meets the business’ requirements prior to serving contracts. In a quality or technical role, that the data is accurate and reliable.

Risk management and mitigation requires access to the correct data needed to understand the supplier being vetted – things like certificates and accreditations awarded and held by trusted third party sources are one way of ensuring that the suppliers in question are themselves trustworthy. Any verifiable way a supplier can prove that they are reliable enough to be awarded the contract with your business, and be of value, is useful in the way of risk management.

How Can I Implement a Data Governance Strategy?

There are a number of ways, the easiest being ensuring the data you are collecting comes from a credible source. This can be ascertained with a certificate or other accreditation which can give you peace of mind that your data is reliable. From a supplier management perspective, this would be requested from the supplier you are trying to build a relationship with and cross-referenced to validate.

Then it is the case of ensuring that this level of diligence is carried throughout the business.

Facilitating and fostering collaboration within your strategy by removing roadblocks and data siloes to allow information to flow smoothly across your business will help data governance policies become holistic in nature.

There are frameworks, as well as solutions, to help tighten up and enact data governance policies, as well as making it easier to enact these policies across your business. The more visible, accurate, and accessible you can make data the easier it will be to ensure it is accurate and compliant. For the most assurance, a digital solution or software provider with a proven track record of helping companies optimise their strategies is likely the best way to make your strategy as efficient as possible.

It is worth noting as well that “in Forrester’s Data And Analytics Survey, 2023, 73% of data and analytics decision-makers said that they expect their firm to increase its spending on data governance in the next 12 months.” – Jayesh Chaurasia, Sudha Maheshwari, Michele Goetz, Gabrielle Raymond, Jen Barton, “Data Governance is the Foundation of Insights-Driven Business”, 5th Feb, 2024 Data Governance Is The Foundation Of Insights-Driven… | Forrester

This indicates a clear trend in the way of businesses dedicating budget and committing to change regarding their data governance policies and frameworks.

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