Tag Archives: Contracts

How to achieve a successful relationship with your suppliers – A Checklist

In a time of financial stringency a good relationship with your supplier becomes much more important.  Remember, if you are tempted to coerce them into reducing prices, you have a direct interest in their survival in the market place,  Maintaining a good relationship may be a means of ensuring that you both survive and that can’t be bad.  So had do maintain you key relationships with suppliers.

  1. Make it a two way relationship! Seek to create value for both of you in terms of lower costs, reduced risks, greater efficiency, better quality, innovation and logistics – work together to improve.
  2. Improve communication! Invest in meetings with your suppliers that extend beyond the contractual and service issues.  Get their feedback on how easy you are to do business with and respond positively.  Give feedback to them.
  3. Segment you suppliers – categorize them! Determine with which of your suppliers your require a relationship that is  tactical (short-term/ad hoc), approved (occasional), preferred (more frequent) or strategic ( you have a business dependency on them).  Determine which are the most critical for your business and concentrate your relationship building efforts on them.  But it will be useful to check ( with care) if they see things the same way – you may get some interesting answers!
  4. Ensure you have senior sponsorship! For your strategic suppliers it is a real plus if CEOs of client and supplier organizations know each other.  If you can align the strategic objectives of both organisations, you can strengthen both
  5. Align information, roles, responsibilities’ and processes! Be clear about who is responsible for what on both sides of the relationship and how the relationship will be managed.  Flexing your standard processes to simplify the relationship with your key strategic suppliers can pay huge dividends.  Ensure your information systems and technology support the relationship you want to have with your suppliers.
  6. Develop the right skill set! Relationship management requires a different skill set to that traditionally found in contract management.  Communications and positive influencing skills require a new perspective!  You may need to invest  in training and possibly some change in personnel to get it right
  7. Treat them fairly! If your cash flow allows it, pay their invoice quickly.  If you know you have an on-going need and a business plan that supports it, guarantee future values.  Be realistic with them about what the future holds for both of you and give them a forecast, if you can.
  8. Measure the benefits! Putting a price on any relationship is difficult.  But having a  good relationship with your supplier has many hard and soft benefits for example faster speed to market!  You will also gain in innovation – a new source of ideas for   your  business as well as first rate information about potential changes in the market

Go for it!  Because what you should be able to achieve with a really good relationship is quality, optimum pricing and a more resilient supply chain.  All provide great value to your business!

Successful Management of Service Contracts – the UK National Audit Office Value for Money Report – December 2008

In 2007-08, UK central government spent over £12 billion on service contracts primarily in the areas of information and communications technology, facilities management and business process outsourcing. The organizations surveyed estimated that they spent on average the equivalent of two per cent of annual contract expenditure on managing their service contracts.

The delivery of public services, protection against service failure and achievement of value for money are all dependent on effective contract management. The consequences of service failure can be serious – recent delays in the marking of SATS tests have highlighted the important role contractors play and the impact service failure can have. At the same time, this report identifies examples of good practice contract management, such as the Department for Work and Pensions’ contract with BT to provide telecommunications services where there was good senior management engagement with the supplier.

The report examined how well central government organizations were managing their service contracts, assessed against the good practice framework for contract management which the NAO developed at the outset of their work. Contract management is especially important where suppliers are engaged to provide services over a long period of time and clients need to ensure that service levels and value for money are maintained over the duration of the contract.

The key findings from the survey are given below and you can learn more about the report at the NAO Website at this link!

But if you would like to know how well your organization is delivering its services contract – G&W Consulting can provide you with an MPM Review which can tell you how well your organization is dealing with the issues identified blow. You can contract us at this link

NAO Report – Key findings

  • Organizations were not always giving contract management the priority it deserves.
  • Organizations do not always allocate appropriate skills and resources to the management of their service contracts.
  • There were weaknesses in key performance indicators and limited use of financial incentives to drive supplier performance.
  • Despite the critical nature of the contracts in seen in the survey, many did not have in place some or all elements of good practice risk management processes.
  • Value for money testing can result in significant savings but the extent to which organizations test the value for money of ongoing services and contract changes is variable.
  • In general both organizations and their suppliers were positive about working relationships, though less than half of organizations had implemented a supplier relationship management programme despite what appear to be clear benefits
  • The Office of Government Commerce can do more to support central government organizations to improve contract management.

Don’t forget to see our controversial paper on Benchmarking at our White Papers and Other Resources page – we would very much welcome your views and comments.

Article – Benchmarking, An Infantile Disorder?

We hope to provide you with lots of resources here at Making Performance Meaningful, the G&W Consulting Blog, to help you in improving your management of services and service contracts.  Our first White Paper has been written by Geoff Edmundson, a G&W Director. Its presents a   provocative view of benchmarking particularly as it relates to the Facilities Management industry.  You will find a link to the White Paper at our White Papers and Other Resources page and we would very much welcome your views and comments. Here is what Geoff has to say about it in summary.

“Benchmarking has become associated with an ‘everything-can-be-measured and costed’ approach that can deliver a quick-fix from providing competition advantage to breakthroughs-in-thinking, changing culture, etc and represents a view that knows the cost of everything and the value of nothing. Benchmarking is becoming what statistically can be called ‘data sampling’ and ‘inference’, where data is purchased second and third-hand or is captured by proprietary software and then warehoused for some future use? What reliability can be ascribed to data, when it is analysed in the abstract without knowledge or understanding of the organisation and processes that have generated it or where little credence is given to its shelf-life?”