Tag Archives: Service Failure

A CHECKLIST FOR REDUCING SUPPLIER FAILURE

Do you depend on a key supplier?  Can you say yes to all these questions?

Understand your supplier

· How much do you really know about your suppliers?

· What evidence do you have to support your appraisal of their financial / legal / technical status?

· When was the last time you verified or validated the evidence?

· Are they operationally stable?

· What is their position in their own market niche, segment or sector?

· What do their competitors think of them?

· How resilient is their own downstream supply chain and how do you know?

· How will you know if the position changes?

Understand your dependence on your supplier

· What role do they play in your business?

· How dependent are you on them?

· What will it cost you if they fail?

· Do you have a contingency plan?

· What are the alternatives and how would you make a change?

Let your supplier know about you

· How strong is your relationship with your suppliers?

· How much do your suppliers know about you?

· Have you shared your business plan with your suppliers?

· Would they know enough about your business to recommend new services and products that could add value?

Have good information

· Do you have a strategy for managing supplier information?

· Is the information your suppliers provide reliable and how do you know?

· What evidence do you ask for in support of the information supplied?

· Is it up to date and can you access it readily?

· How often do you review it?

· Do you have an early warning system?

Think risk

· How often do you scan the landscape in which you operate?

· What do you do with the data, information and knowledge acquired?

· How have you assessed the operating risk to your business?

· How resilient is your supply chain and when did you last check?

· What are the sources of risk to your supply chain, e.g. downstream demand, upstream supply, environment, etc?

· What are the risks to your supply chain and do you understand how they could impact your business?

· How effective are you at identifying, assessing and controlling risk?

· When were your business continuity / disaster recovery plans last tested and did they include your supply chain?

If you had a problem answering these questions  or you would like a review of the risk and resilience of your supply chain by consultants who have provided these services in both the public and private sectors please  contact us

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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.