Outsourcing Contract Penalties: Do Vendors Respond to the Pain?

“It’s odd that you can get so anesthetized by your own pain or your own problem that you don’t quite fully share the hell of someone close to you.” — Lady Bird Johnson If a pound of carrots doesn’t drive outsourcing vendor performance, maybe a little pain will? Read on to learn how to structure service level credits to incent vendor performance. [Read More...]  Read More →

Outsourcing Contract Incentives: What is a Pound of Carrots Worth?

Do you wonder if contractual performance incentives work? These are the “bonuses” vendors get for exceeding service level agreement (SLA) performance targets or achieving certain milestones earlier than expected. We do, too. Take the poll survey, view the results, and read our nine suggestions on how to make the best use of contract incentives. [Read More...]  Read More →

Another Tale from “When You Don’t Have Vendor Management Governance”

As related to us by a reader. Picture this: Your company has outsourced customer service for some products, but not all products.  You have a single vendor with over 1,000 seats dedicated to your operation.  These seats are located in several centers located in the USA (for reasons not important to this story). Your vendor management team is made-up of a single person.  This person coordinates five different programs, handles contractual issues,... [Read More...]

In the Absence of Outsoucing Governance or Vendor Management

A funny story told to us by an employee of a major US company (which we’ll call XYZ) with thousands of outsourced call center seats (domestic and international): XYZ has two call center programs.  One is a major inbound customer service program and the other is a small (about 45 agents) complex inbound/outbound marketing programs that focus on driving customer loyalty and create a significant revenue lift. XYZ’s marketing and customer... [Read More...]

Poll: How did you learn to be an effective vendor manager?

Vendor management is not a traditional discipline, like project management, software development, or operations management. Take a moment to share how you learned to be an effective vendor manager in this poll: Have incentives (bonuses for certain performance targets or milestones) in your vendor contracts improved vendor performance? Yes No My vendor contracts do not have incentives.  Loading ...  Read More →

Vendor Managers Can Satisfy Internal Stakeholders

Before outsourcing, internal operations teams usually spend significant effort appeasing senior management by explaining every reason why deviations from performance were outside their control. Marketing launched a new campaign. IT’s servers were slow. The telecommunication vendor’s T1 was hit by a backhoe. The competitor launched a misleading campaign. The weather shutdown deliveries in Chicago. Well, have you noticed the change in... [Read More...]

Paying Outsourcing Vendors

Most good outsourcing contracts require the customer to fulfill only two primary obligations: protect the vendor’s intellectual property and to pay for services in a timely manner. While most buyers have little challenge with upholding it’s confidentiality obligation, vendors universally will point to timely payment as the number one problem they experience with their customers after implementation. As an executive managing an outsourcing... [Read More...]

Vendor Management: Quarterly Review Methodology

Performance management is a fundamental aspect of managerial effectiveness. Establishing clear goals with your boss, peers, and employees is essential. With vendors, you have contractual service level agreements. At certain points in the year, good managers check-in with their team members to provide feedback on progress to goals. At the end of the year, employees get final reviews – complete with bonuses and merit increases. With vendors,... [Read More...]

Insights on Procurement Outsourcing

A couple of weeks ago, Phil Fersht kicked off a firestorm of conversation with his Horses for Sources article on HR Outsourcing. We shared our opinion on the topic in our article debating the value of HR Outsourcing. Well, this week, Jason Busch published his opinion on procurement outsourcing on Spend Matters. Jason is one of the preeminent strategic sourcing, procurement, and spend management experts, and we encourage strategic sourcing and spend... [Read More...]