色色研究所

Even the most modern procurement teams face a surprisingly stubborn data problem: duplicate supplier records. These aren鈥檛 just messy data points. They鈥檙e quiet drains on budgets, compliance efforts, and supplier relationships.

The root of the issue? Fragmented, incomplete, and inconsistent supplier data鈥攑articularly the failure to properly resolve legal entities across systems.

Legal entity resolution may not sound glamorous. But for enterprises dealing with sprawling vendor ecosystems, the ROI is anything but dull.

Why Duplicate Vendors Are So Costly

At first glance, duplicate supplier records might seem like an annoyance for AP clerks and procurement analysts. But look deeper and the costs stack up quickly:

• Overpayments due to multiple accounts and inconsistent terms.
  
• Missed volume discounts because spend is fragmented across duplicate records.
  
• Increased risk exposure by doing business with blacklisted or high-risk entities unknowingly.
  
• Regulatory compliance challenges when ultimate beneficial ownership or legal parentage is obscured.
  

A Real-World Scenario: Horizon Manufacturing

Horizon Manufacturing, a (fictional) $5B industrial goods company, was undergoing a finance-led transformation project. As part of the initiative, they reviewed their top 500 suppliers by spend. That鈥檚 when they discovered something alarming: one of their largest 鈥渧endors,鈥� listed as 鈥淥aktree Logistics LLC,鈥� appeared multiple times under slightly different names:

• Oaktree Logistics, Inc.
  
• Oak Tree Logistics (Canada)
  
• OAK TREE LOGISTICS
  
• Oaktree Holdings Ltd.
  

These variations existed across five different ERP systems. As a result, Horizon had been:

• Paying invoices twice in some instances.
  
• Missing out on volume-based rebates negotiated by the logistics team.
  
• Paying inconsistent rates due to duplicate supplier IDs across business units.
  

Total cost impact? $2.4 million over three years.

If Horizon was your company and this happened, it wouldn’t just be about the dollars. You’d quickly realize that, without legal entity resolution and a unified supplier view, risk assessments are meaningless, and your company is flying blind when it comes to compliance.

What Is Legal Entity Resolution?

Legal entity resolution is the process of accurately identifying, matching, and grouping supplier records that refer to the same underlying company鈥攅ven when those records differ by name, address, country, or other metadata. In other words, legal entity resolution means figuring out when different names or records actually refer to the same company.

For example, if a company shows up as 鈥淚BM,鈥� 鈥淚nternational Business Machines,鈥� and 鈥淚BM Corp.鈥� in different places, legal entity resolution helps match them all to the same company so there鈥檚 no confusion.

It goes beyond fuzzy matching or de-duplication. It incorporates:

• Corporate hierarchies (parent-subsidiary structures)
  
• Ultimate beneficial ownership (UBO)
  
• Geographic disambiguation
  
• Legal entity identifiers (LEIs), DUNS, and tax IDs
  

The Hidden ROI: Four Levers of Financial Impact

Organizations that invest in legal entity resolution often realize strong returns, though not always in the ways they expect. Here are four key levers:

1. Eliminate Duplicate Vendors

Large enterprises often find that 5 to 15 percent of supplier records are duplicates. Cleaning this up leads to:

• Payment error reduction
  
• Improved vendor management
  
• Lowered administrative burden
  

2. Improve Spend Visibility and Negotiation Power

When spend is spread across fragmented supplier records, it weakens procurement鈥檚 leverage. Legal entity resolution enables:

• Consolidated spend
  
•  Volume-based pricing
  
• Stronger vendor relationships
  

3. Reduce Compliance & Risk Exposure

Knowing who you鈥檙e legally doing business with is critical for regulatory compliance. Legal entity resolution supports:

• Sanctions and risk screening
  
• Supplier identity verification
  
• ESG and diversity program reporting
  

4. Streamline ERP and System Migrations

During ERP transformations, supplier master data often gets copied “as-is” from legacy systems, including all the mess. With entity resolution in place, companies avoid:

• Carrying over duplicates into new platforms
  
• Rebuilding supplier relationships after going live
  
• Costly manual cleanup after cutover
  

Legal Entity Resolution Is a Strategic Imperative

Despite the value, many organizations still treat supplier data as an afterthought鈥攕omething to be cleaned up periodically, rather than continuously maintained. But as supplier ecosystems become more global and interdependent, clean data is no longer optional.

Legal entity resolution should be treated as a foundational capability, much like identity resolution in customer data management. It鈥檚 not just about cleaning up records. It鈥檚 about:

• Enabling strategic sourcing
  
• Ensuring financial integrity
  
• Managing risk across an expanding vendor base

Getting Started: A Practical Framework

For leaders looking to make the case internally, here鈥檚 a simple framework to kick off a legal entity resolution initiative:

1. Assess your supplier data
   
   • What % of your supplier records are duplicates?
     
   • How many systems house supplier data?
     
   • What鈥檚 the impact on payments, compliance, and contracts?
     
2. Involve cross-functional stakeholders
   
   • Legal entity resolution is not just a procurement concern. Bring in stakeholders from AP, treasury, compliance, and IT.
     
3. Start with a pilot
   
   • Start with your top 500 suppliers or a high-risk category (e.g. logistics, international suppliers, regulated vendors).
     
4. Measure impact
   
   • Track time-to-pay improvements, duplicate elimination, risk tiering accuracy, and negotiation wins.

Accelerating Results with the Right Technology

While a practical framework can set the foundation for better supplier data management, the real acceleration happens with the right technology. Manual efforts alone can鈥檛 keep pace with the complexity of today鈥檚 supplier ecosystems, especially when data is fragmented across systems. That鈥檚 where purpose-built platforms come in. By automating legal entity resolution with AI and enriched third-party data, organizations don鈥檛 just eliminate duplicates鈥攖hey gain a continuously updated, unified supplier view that powers smarter decisions, improves compliance, and drives measurable ROI.