Tips on forging a productive and smooth-running relationship
The performance of an outsourced deal is crucially dependent on building and maintaining an effective partnership between buyer and supplier.
It is essential that procurement understands how to achieve such a partnership and is able to recognise potential problems before they start to damage the contract.
Here are six steps to ensuring a smooth-running relationship with your outsourced suppliers.
1. Think carefully about your needs
You have decided that you need to outsource but exactly what are you looking for? It sounds obvious, but it is essential to think this through carefully. Establish at the very first point of contact with a supplier precisely what you want from the relationship and from the service itself. If you need support to define the full specification, make this one of the first items on the agenda for discussion.
2. Define the role the supplier will have
This may seem unnecessarily time-consuming when there are so many other elements of the contract and supplier relationship to finalise, but it is important to agree how the supplier will be viewed within an organisation. If a supplier will provide a service on-site, how will it be presented to the wider company? Will it bring expertise and gravitas to the organisation, or will it serve more of a back-office function? Defining the supplier’s relationship in this way will make it easier to present deliverables and outcomes later on.
3. Set clearly defined objectives
You need to ensure your suppliers know what you want from the relationship. Again this may seem obvious, but in practice it is anything but. Procurement (and others) will go to a supplier with a set of needs, and expect the supplier to deliver them. Unless all key aims and targets are laid out in a precise way it is likely that both parties will interpret expected behaviour and outputs differently.
Vital issues to agree on include service level agreements, key performance indicators and incentives.
4. Communication, communication, communication
Communicate effectively with suppliers and ensure that not only are all key contacts at the supplier aware of all issues mentioned above, but that they are also communicated and completed by their respective teams. This is also true of buyers and procurement – they need to be aware of targets, so that if missed, it can be raised with the supplier.
5. Nurture the relationship
It can be easy to forget about a supplier once contracts have been signed but remember that this is not the end of the relationship. It can strain both sides when status reports and updates are requested at a moment’s notice. To avoid this make sure you regularly keep in touch with suppliers. Ask to be updated on successes, failures and any issues. This not only strengthens the relationship but also ensures you can jointly work to solve any problems long before they become project-threatening issues.
Liaise with suppliers at the outset to agree regularity and format of updates. Will they be weekly, monthly, quarterly? Will they be formal, or a more informal email catch-up? Defining these updates will ensure that any metrics you need to prove that suppliers are achieving their goal can be completed in a timely fashion, as well as enabling buyers to be fully briefed.
6. Maintain flexibility
Finally, the key to any successful relationship is flexibility. Very rarely is a final outsourced deal exactly the same as the initial brief. Plans go through a number of changes and natural process of evolution.
Flexibility goes hand in hand with open lines of communication. If both sides of the relationship provide feedback, projects and relationships will go from strength to strength. The deal is best thought of as a “continuous improvement system”: the system will get better but only with the effort and input from both sides. Buyers need to ensure they bear their share of responsibility for the success of relationships and, by proxy, projects.
