"Shopping" covers a multitude of activities—and sins. On the positive side, shopping for the most qualified supplier, taking into account engagement and longer-term and enterprise goals. Is it a niche engagement? Are we looking for a supplier with broader capabilities? Do we have a current supplier who is technically competent but culturally incompatible?
Or are we "shopping" a proposal which we suspect will not prove economically viable for the supplier, looking for one willing to agree to unfavorable terms just to penetrate our account—hoping subsequent business will recoup their initial loss? Beware suppliers willing to buy your business. If anything goes wrong with their loss leading engagement, they will be compelled to abandon it—and you—to avoid compounding their losses.
The more we clarify and understand all our goals, the more likely we are to engage the right supplier.
Needless to say, we must never violate the tenet that an outsourcing relationship should be viable for both client and supplier. At its core, a client-supplier relationship is a personal one, with trust and the presumption of good will at its foundation. We believe too much effort is spent on contractual penalties to invoke in the case of failures unlikely to occur, and too little on creating an active governance framework to root out and address problems before they impact quality or timeliness.
Following, we outline the external supplier lifecycle in broad brush strokes:
- Pre-qualify suppliers — Someone who knows enough to get multiple references for a contractor building an addition to their house may still think nothing of awarding a contract worth ten times as much to a consultant based on word-of-mouth recommendation or prior relationship—regardless of actual qualifications or experience. Particularly in the event that work will be outsourced on a regular basis, we recommend formalizing the pre-qualification process. That includes an initial Non-Disclosure Agreement (NDA) to enable the exchange of information, supplier capabilities Request for Information (RFI), side-by-side comparisons of supplier capabilities and rates for similar resource, financial reports on suppliers as well as other financial analysis both internal and external, and an overall supplier capabilities matrix where the organization has more than one strategic supplier.
- Choose a supplier — Whether bidding out maintenance or a sophisticated, complex engagement, we recommend following a formal process: Request for Quotation (RFQ) for software, maintenance, or similar; Request for Proposal (RFP) for project-related work.
- Contracts — Working at and with some of the world's largest enterprises, we have gathered a wealth of experience regarding the items a contract should include, and how they should be specified, implemented, measured, and enforced. See our contracts page for detail on Master Services Agreements (MSAs), Statements of Work (SOWs), and Independent Contractor Agreements (ICAs).
- Relationship management — We recommend a robust process for conducting ongoing business with your suppliers as they deliver services. Those include formalized supplier governance; metrics applicable for use as Key Performance Indicators (KPIs); Service Level Objectives and Agreements (SLOs, SLAs); establishing SLAs; defining issue escalation; and, generally, working with both you and your suppliers to identify and institute best practices in these areas.
- Supplier performance — We recommend creating a quarterly engagement summary for your key suppliers: a high level view of progress of the relationship including key metrics covering expansion or contraction and a summary comparative scorecard; and a formal Customer Satisfaction Survey (CSAT) conducted semi-annually for all key suppliers. We have developed a leading-edge satisfaction survey analysis process geared toward identifying and remediating issues before they impact service quality and manifest themselves as reduced satisfaction scores. We advocate working with your key suppliers to conduct a uniform survey across all parties so that comparative performance and value delivered can be assessed. Suppliers are just as interested as you are in understanding where they stand, competitively, in your account.
We explore each aspect of the supplier lifecycle in further detail in subsequent pages.