How do I perform supplier relationship management for telecoms?
You will already have performed checks and benchmarking exercises on your existing vendors, but there is much more to a supplier relationship than market reputation and competitive pricing.
You need to be able to get the best possible performance out of your suppliers at all times, so that you can build a long-term relationship that you can develop over time, and which will save you from overly frequent vendor changes and disruptions to your service.
Step One: Understanding Your Supplier “Business Relationships”
When dealing with your suppliers we believe it’s important to understand whether or not there are two sides to the relationship with your supplier. By this we mean:
- What kind of services and products they provide, and,
- Whether they’re an existing customer of your business and if so, understand as much as possible about that relationship. Find out: what products and services they are purchasing, how long they’ve been a customer, who owns the relationship internally, and how the value of the relationship is viewed internally, not just monetary but also from a relationship point of view.
The goal should be not to perform this as a one off exercise but to formalize a program by which Supplier Relationship Management can be owned and performed on an on-going basis. This relationship could have a big impact on the sort of relationship you can expect to have with them.
Step Two: Managing Performance
Our advice is to proactively manage your suppliers on a monthly and quarterly basis, and the easiest way to do this is by putting together a review vendor scorecard based on five key points:
1. Delivery Performance Look at how successful they are at delivering services to your organisation. Are they delivering services ahead of your request date? Or are they always late? Similarly, how long does it take them to implement new programmes or updated technology?
2. Service Performance When it comes to service performance, no news is good news. You will probably only hear about a vendor’s service when there is a complaint within your organisation, or when your own systemic tests flag something up. Make a note of any issues and the shorter that list is, the better!
3. The Reasons for Outages Outages will happen, but your supplier should be able to tell you exactly why and how an outage has happened, so that you can be reassured that they will not allow the same thing to happen again. If the same reasons are cropping up again and again, you will need to ask some serious questions.
4. The Statistics Behind Outages This is all about their ability to bring things back into production after an outage. Look at their overall monthly downtime and compare this to the targets identified on your SLA. Are they matching up to expectations?
5. Accounts Payable How efficient is that vendor when it comes to sending an invoice every month? Is the invoice always late; are they billing you properly; and how many disputes are being raised with regard to payment? Your vendors should not be monopolising your accountants’ time, or giving your accounts payable department any cause for concern.
Take each of these categories and work out how important each one is to you and your business. Maybe service performance is twice as important as accounts payable, or maybe they are all of equal importance to you. Weight these categories out of a total score of 100, then go through each one individually and give your vendor a score or a grade based on their monthly or quarterly performance.
Do this same exercise with all of your various suppliers and compare them all. If a client is getting straight “A’s” month after month, then you know you can trust them to get on with their work. If they’re scoring Cs and Ds, you will need to invest a little more time into that supplier relationship management or a Performance Improvement Plan a.k.a “PIP”.
Step Three – Regular Reviews
The only way that your supplier will know how they are performing in your eyes is if you share this information with them. Use these scorecards as a basis for your monthly or quarterly reviews, and show them exactly where your service is lacking and where it is performing particularly well. You can then single out a particular area for improvement and help your vendor to perform more effectively. Alternatively, you may determinate that they are not a useful supplier that you should have in your network.
By having a supplier scorecard metric in place, when it comes time to end the relationship and migrate across to another supplier the termination reasons will be clear on both sides as well as internally especially if the relationship is 2 fold as noted above. Used properly, these scorecards can be a great motivational tool for your suppliers, and an ‘at a glance’ way for you to keep tabs on their performance on an on-going basis.
If you’re curious to see a demo of our built in automated temforce supplier relationship scorecard, to understand how our software can manage SRM for your business signup for a demo to learn more.
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