Onboarding new suppliers has long been a time-consuming and expensive process. But a new blockchain-based platform that is open to everyone can streamline this crucial activity. The early results are promising.
Supplier onboarding — the process of collecting the information and data required to set up an organization as an approved supplier — is essential to do, but no one likes to do it. It is not uncommon for it to take a month to onboard a new supplier and can take up to six months at many large organizations.
Whether 30 days or six months, the pain and delay stem from manual processes that buying organizations use to vet supplier data and documentation such as ISO certifications, bank account information, tax documents, and certificates of insurance. While frustrating, the work is foundational to ensuring new suppliers comply with relevant laws, regulations, and corporate standards.
Several digital solutions such as HICX and Supplier Gateway have emerged to help buying organizations solve the supplier onboarding problem. However, while they automate and make the supplier onboarding experience easier, suppliers still have to go through an onboarding process with each customer. For suppliers with hundreds (or even thousands) of customers, the digital process is better but still far from ideal.
We’ve examined a potentially better solution: A more holistic supply chain platform approach that helps streamline work across a supply chain ecosystem of trading partners. It’s called Trust Your Supplier.
A Promising Remedy
The concept of supply chain platforms is not new. One example is Chinese appliance manufacturer Haier’s COSMOPlat (which stands for Cloud of Smart Manufacturing Operation Platform). It has been used to increase collaboration and streamline operations ranging from innovation and design to supplying materials and components to solving technical problems and providing new services. While Haier could have just developed the solution to meet the needs of working with its own suppliers, it chose to take a platform approach and open the solution.
Other examples are systems developed by Walmart to automate negotiations with smaller suppliers and to manage invoices from and payments to third-party freight carriers.
As part of our research at the University of Tennessee on highly collaborative business partnerships, we had the opportunity to study a creative strategic alliance between IBM and Chainyard, a digital transformation company that focuses on blockchain solutions. The strategic partnership caught our eye because the parties were teaming up to develop an industry- and company-agnostic platform solution to address supplier onboarding, compliance, and risk-management issues plaguing virtually all companies.
The result of the partnership: A patent jointly held by both Chainyard and IBM and the formal launch of Trust Your Supplier (TYS), a blockchain network solution.
An essential part of the vision was to create a true blockchain network that would allow a worldwide network of buyers and suppliers — not just IBM and its suppliers — to share trusted, standardized data. Today the TYS blockchain network includes 11 large purchasers (e.g., American Express, BT, Lenovo, Nokia, Pearson, and Thermo Fisher) and over 100,000 fully vetted suppliers. In addition, more than 400 million other suppliers have some or a significant part of their data available on TYS through partnerships with third-party compliance organizations on the platform such as Moody’s.
The TYS platform enables buyers and their suppliers to opt into the network. Suppliers create a single digital identity (i.e., a “corporate wallet” or “digital passport”) to share with their customers that they can use over and over again without having to enter the data every time for a new customer or when an existing client is doing compliance checks.
The TYS platform is showing significant promise for both purchasers and suppliers:
By eliminating redundant efforts and streamlining the process, some of the early-adopter purchasing organizations that have used TYS have reported cost savings of nearly $500 per supplier. For an enterprise with tens of thousands of suppliers, this can result in savings of eight figures in the overall management of their supplier base.
TYS has reduced the average supplier onboarding time to under a business week, an impressive average reduction of 67%. Once on the network, suppliers can be onboarded with additional companies almost instantly. Quicker supplier onboarding means not having to wait to start work after a deal is sold. And because suppliers manage and control their data only on the network, it eliminates the administrative burden of having to manage the same or similar data across multiple customers.
A New Era
We believe a paradigm shift is occurring. Organizations will increasingly adopt platform solutions like COSMOPlat and TYS that will solve systemic supply chain issues for a vast number of players. Supply chain management will be transformed.