Executives and outsourcing vendors alike are constantly evaluating what vendor management is. Here is our quick definition of vendor management: Vendor management is the discipline of establishing service, quality, cost, and satifaction goals and selecting and managing third party companies to consistently meet these goals.
We’ve provided another week of valuable advice to vendor managers everywhere. Clearly, managing outsourcing vendors is a difficult task made more difficult when vendor managers don’t “get into the weeds” and ensure vendors are effectively managing daily activities and planning future activities accurately. So, our topics of the week addressed just these types of issues:
We definitely appreciate the feedback we’ve received and we’ll be sure to address your ideas in upcoming articles! Until then, please keep the ideas flowing and we’ll be sure to provide you perspectives on effective vendor management!
We’re not rookies here at 360° Vendor Management. We’ve seen a fair number of outsourcing contracts serving different types of operations. While the fine specialty advisory and law firms will write lengthy white papers explaining why service level agreements, termination clauses, change management, and governance organization (or lack thereof) are the root of all evil, the nuts and bolts of day-to-day vendor management is where most outsourcing relationships go sour.
We recently shared our perspective on the importance of forecasting. Failure to forecast or the inability to forecast accurately is definitely a reason why vendors fail to perform, but you, the highly skilled vendor manager, can control that. Ensuring your vendor schedules staff to meet your forecasts is an entirely different challenge because it’s a level of detail that most vendor managers completely ignore, but is a key ingredient in the forecasting-scheduling-staffing triangle of workforce management. Our experience with vendors and in-house operations teams suggests that scheduling is biggest challenge to meeting timeliness goals.
Read the rest of this entry »
One of the fundamental processes all outsourcing relationships must use is forecasting. Forecasts of volumes are essential to ensure the vendor has adequate information to manage staffing and scheduling.
Effective forecasts typically include expected volumes over 2-6 months - enough time to hire and train new resources. The forecasts should managed at a very granular level - call center operations should forecast in 30 minute intervals for each day in the forecast, while back office operations that handle daily batch processing systems should forecast volumes at daily intervals. Effective forecasts also look at historical trends. For example, your volumes might be lower on Fridays, except the last Friday of the month due to your billing cycles. However, the Friday after Thanksgiving, which is not the last Friday of the month this year (2007) could be either a thunderously busy day or simply a non-working holiday. Historical trends are very important.
Read the rest of this entry »
Following years of “outsourcing done badly”, transitions of new programs to vendors had come under intensive scrutiny coupled with incredibly detailed requirements gathering processes. While this slowed implementations and limited near term ROI, parties understood that this level of detail was necessary to successfully transition operations to vendors.
Over the last couple of years, we have witnessed a terrible phenomenon. Companies are not taking the time properly define requirements. The consequences are dire - incomplete and/or inaccurate requirements result in a poorly performing program. In response, the client requests changes. Excited to avoid being scapegoated, the vendors make the necessary changes, but then climb learning and productivity curves caused by the changes. In the past two years, we have seen two different programs buckle under clients requesting over 100 changes to each program…in the first three months! The vendors struggled for over 10 months to recover from the changes. Meanwhile, the client couldn’t understand why the vendor was failing to meet quality and turnaround time expectations, so the client changed many of their internal vendor managers and vendor account management key resources. Each new resource requested more changes. New management teams even renegotiated increased penalties for vendor non-performance, further deepening the pain the vendors experienced. Meanwhile, the vendors’ teams numbering over 3000 employees were whipped back and forth with all the changes…they never caught up. The vendors charged over $300k in change control fees.
Read the rest of this entry »
Business process outsourcing contracts are often strong on quality and turnaround time metrics. The reason is simple: most back office operations focus on these two metrics and then grind their internal operations staff through mandatory overtime periods to work through excess inventories. Vendors, on the other hand, will charge for overtime, will resist excessive overtime to avoid expensive attrition, and will manage inventories unevenly - often giving vendor managers heartburn!
Read the rest of this entry »
After many years of seeking vendor management resources (and finding none), we’ve decided to share our own. We’ll be posting on a fairly frequent basis, so we hope that you’ll check-in often.Sure, you could use Gartner or Forrester, but their software-focused perspectives simply don’t address what the average vendor management executive cares about: how can a vendor management team successfully drive vendors to meet business objectives?So, you can expect the type of content from us that addresses the true blocking and tackling essentials of vendor management. For example:
Expect us to address a few key subjects every week. If we’re not hitting the topics of interest, let us know!
