Strategy Clinic: Managing supplier relationships

What can I do to manage better my relationship with my resourcing partner?

What can I do to manage better my relationship with my resourcing partner?

After a honeymoon period, one of my preferred contractor suppliers is no longer delivering the goods. Is this their fault? Or should I be making my longer-term systems direction and resource planning more transparent to the supplier so that it can anticipate my needs? Put simply, what can I do to manage better my relationship with my resourcing partner?

The Solution

Understanding and trust

David Roberts
Executive Director, tif

Four recommendations spring to mind when it comes to understanding and managing supplier relationships.

  • What is the progress of your relationship to date, and the agreement on which it was founded?

  • Are you a preferred customer?

  • Have any changes - strategic, directional or in personnel - occurred in either party that may have affected your current position?

  • How is the interface in your relationship being managed?

    Examination should highlight any reasons for your supplier being unable to meet your requirements, and indicate how the situation can be rectified and whether doing so is justified.

    Take ownership of the communications process to manage the information exchanged and received. If it has been your intention to develop the relationship over time, it is worthwhile each setting out long-term strategies and direction for the other, and agreeing objectives.

    Clarity, understanding and trust are essential communication elements in a key partnership.

    Open communication lines

    David Taylor

    Relationships with suppliers are always a matter of striking a balance between giving them enough information to enable them to become proactive, and giving them to too much information that might make them too predatory.

    You state that this supplier is one of your preferred contractors and this implies that you are not limited to using it alone. It would not hurt to let it know that and to ensure that it is not becoming complacent about its position.

    You need to share as much as you can of your plans, but you also need to make sure that the contractor understands that if it doesn't deliver you will take your business elsewhere. The best thing is to be honest, lay out your concerns and tell it exactly what it needs to do to improve. Find out if there is anything that you are doing to exacerbate the situation and agree a recovery plan.

    Keep the communication lines open from now on and insist that it keeps you fully informed of any problems it is having.

    Conduct a selection process

    Roger Marshall

    Ask yourself why you have a resourcing partner. Are you getting added value from the relationship or could you do just as well by going out to the market each time a new requirement comes up? The answer may be that you are getting a better deal by building relationships with a few suppliers. If so, then taking it into your confidence may help it to improve its service to you.

    I fear that generally, however, this is not the case. Remember that individual contractors do not need to spend long between assignments, they are in a sellers market. Also, it is difficult to predict when assignments are going to end so people cannot be promised in advance but may become available at short notice.

    To get the right contractor at the right time you need to spread the net wide, which means going to lots of agencies to see who is available. Do not accept the first person with a CV that looks acceptable. Conduct a selection process, with interviews and tests, to check them out for yourself. It may be that your preferred supplier can do much of this and approach other agencies for you, but with yet another party taking their cut from the deal, are you truly getting value for money?

    Reveal your long-term plans

    Roger Rawlinson
    Head of e-business technologies, NCC Group

    If you follow a best practice approach, you should review your suppliers and potential suppliers as a matter of course. This is true even if you are satisfied with your current level of service. This process prevents a supplier becoming complacent and enables you to demonstrate that you are consistently identifying and delivering best value to your organisation.

    A good supplier should not fear a tender exercise of this nature but embrace it; after all it is best placed to win the work again.

    The position you describe is one of a deteriorating level of service from your supplier. In the first instance, talk to the account manager about your concerns, and if this fails go to the next level up.

    Hopefully you have service level agreements in place that are unambiguous and measurable - use them.

    However, a supplier relationship is a two-way process and you should make your long-term plans known to it. This will enable it to understand your issues and be more proactive. Some organisations have suppliers attend planning meetings. They are considered more as business partners than the age-old enemy.

    Define what you mean by preferred

    Rob Lambert
    Senior lecturer in management information systems, Cranfield School of Management

    Yes there are some things you can do to better arrange the relationship with your resourcing partner.

  • You referred to "delivering the goods" - how clearly are they defined and understood?

  • Are the "goods" the issue or is it some other aspect of service or attitude that concerns you?

  • Are you keeping your side of the bargain: ie clear requirements, a reasonable degree of certainty, few changes to specification?

  • How well informed are you about its business operations? If it is a preferred supplier is it open with you about its issues: eg skills shortages, or some operational mishap? As with all relationships if things are kept secret, where does that leave trust?

  • Yes, you do need to include it in your IT strategic planning so it understands better what you are trying to achieve and your future business direction.

  • In the longer term, you need to review what you mean by "preferred", does that mean you trust it and therefore have some form of relationship whereby it gains as well as you when you realise benefits? This may involve them taking some additional degree of risk.

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