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Managing subcontractor relationships with emails like it’s 2005?
Rethinking the way data is exchanged with suppliers is not just a cost saving activity; it is transformative and enables businesses to redefine their position in the value chain.
Managing subcontractors = managing data flows
The management of a supplier should be thought of as a continuous exchange of data. This goes two ways:
- As a contractor, you send data about the customers, SLAs, job requirements, etc.
- The subcontractor sends you back compliance documents, proof of service, invoices, statements, etc.
This continuous flow of data is the main cost of transaction with suppliers: administrative time, dealing with late payments and managing unhappy customers. My experience of the inefficiencies surrounding managing data flows is within the waste and facilities management industries, and this is referred to throughout this post to provide context but in fact, the management of data is relevant to any industry or organisation that has a constant need to exchange information. Let’s look at the three moments of data exchange more closely:
Managing this constant flow of data is a tedious and a daily challenge for businesses. However, operational excellence for data exchange has now become a decisive competitive edge. Indeed, customers’ expectations are rising, demanding:
- Complete and auditable record of all documents pertinent to the subcontractors working on their site.
- Real-time, reliable proof of service.
- Rich and complete raw data and reports on their service.
“Please send your invoices to invoices@mycompany.com”
As in many other industries, most waste management companies and facility management operators, for instance, are still using emails and attachments to receive and store essential information and documents from their suppliers. This results in great inefficiencies and increases the cost of transactions with subcontractors. Meanwhile,
- Uber is not manually storing driver licences of its drivers in a shared folder.
- Airbnb is not receiving photos and reviews in their mailbox.
- Deliveroo is not asking its drivers to send email confirmations for each new customer.
If they make any progress at all, too many companies only consider automating their outflow of documents: sending invoices, sending purchase orders. This is because it is an easy place to start: the outflow of data is something they control. When it comes to incoming data, suddenly all processes are entirely manual. How can we control inflow of unstructured or semi-structured data, coming from multiple suppliers in different formats? In previous roles, I have spent considerable time trying to convince suppliers to adhere to templates, to use dedicated email addresses and respect deadlines, but never successfully. Success could be defined this way; the point at which it starts taking less time to chase supplier’s compliance than it would take sorting their documents one by one. This has not been the case yet.
Transforming semi-structured data into structured data
Organisations need to make it simple for suppliers to adhere to automated processes. Often, unless you have the skills in-house, this means working with an external supplier to achieve the business process automation required, making it simple for suppliers to adhere to new ways of working. Surprisingly, this doesn’t have to be costly and can soon prove its ROI. Recently, AuraQ engaged with a customer who had a requirement for automating the inflow of data from suppliers, and as a result, we have developed a solution that transforms any semi-structured content (email, pdf, excel, etc.) into a consistent, structured data set. The solution, called TrajeQt, converts data so that it is ready to be consumed by downstream systems, such as ERP systems, case management applications or robotic process automation bots.
Broken down into simple steps, TrajeQt automates the process of:
- Receiving: TrajeQt can be simply configured to capture data from any source (web integration, email, attachment, document upload). Text image is converted to readable text using a variety of mechanisms, such as OCR (optical character recognition), if necessary.
- Validating: TrajeQt qualifies and validates the data received against configurable templates. Users can define those templates easily for each new type of document and add custom validation rules.
- Standardising: All related data is then presented in a single standard format, as configured for the target organisation. It is ready to be consumed for any further processes: reporting, journal posting, approval workflow, and full robotic process automation.
The TrajeQt tool is available on the cloud, and ready to be integrated through standard APIs to any related system either to receive the semi-structured data, or to output structured data.
Enabling access to all supplier related documents in a single, organised database
This scenario opens up a world of opportunities:
- Suddenly, waste management companies can automatically receive and store any waste transfer notes sent by their subcontractors, in any format, without opening a single email.
- Suddenly, facilities management companies can receive proof of service form a supplier and include it in their online reporting without opening an excel spreadsheet.
- Suddenly, a service provider can capture, sort and surface compliance documentation from its entire subcontractor portfolio and integrate it automatically with content collaboration tools, such as Dropbox Business.
All this, without having to count on hundreds of suppliers to transform, classify and standardise their own data!
Understanding Uberisation through the theory of the firm
It is relevant here to refer to Ronald Coase and his theory of firm (1937): a firm starts to internalise production processes when the cost of coordinating with other firms becomes greater than the transaction cost within the firm. This means, as a reverse, that as we decrease external transaction costs through digital transformation, we open possibilities for new partnerships. This is one of the grids to analyse the pattern of disruption that has been called Uberisation.
In the service industry, where utilisation of assets is essential and local suppliers with a dense customer network benefit from economies of density, there is a strong call to look for local partners instead of building capacity everywhere. This is true in waste management, and it is true for facilities management. I have seen companies so efficient at managing subcontractors that they started to prefer working with external partners than their own branches.
Concluding thoughts – the potential for disruption
Automating exchanges of data with suppliers presents a huge opportunity for disruption. In this new economy, the ability to develop a strong, efficient network of partners is not merely about saving overheads or procurement costs. To conclude, the unique skill of tomorrow is no longer just operational excellence but also the capability to coordinate parties, to consolidate and to reconcile data. It will determine which company makes it and which is left behind. There are numerous ways in which to do this, TrajeQt being one of them. For more information visit the website here.
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