By The Procurement School
Without effective communication, relationships with your procurement partners can quickly become stagnant. This and undoubtedly negatively impact your team’s vendor performance management strategy and outcome.
To nurture a supplier relationship that optimizes outcomes for both parties, performance management should be an ongoing and continuous process. Relevant feedback delivered when the supplier still has the opportunity to correct their course is much more valuable and makes for faster improvements. Therefore, bi-yearly or yearly formal reviews should serve not as the primary mode of communicating and evaluating performance but to augment and document your daily efforts and outcomes.
Building the communication of constructive feedback into your day-to-day operations ensures you keep your objectives at the forefront and foster a culture of goal-directed performance improvement.
To mitigate the risks of poor supplier performance, your ongoing process should include:
Achievable but challenging goals are the foundation of an effective vendor performance management process that motivates vendors to give their best effort. Although you may want to push your procurement suppliers if you set an unrealistic and unattainable goal, you’re more likely to demotivate them.
Goals must be clear, objectively written, and contribute directly to your overall department goals and organizational strategy.
Remember, to be understandable and easily evaluated and tracked, goals should be S.M.A.R.T.:
Goals should address the supplier’s responsibilities and your expectations while also covering the ‘how’ and ‘what.’ For instance, deadlines and delivery dates, expected costs, quantity, and quality would all fall under the ‘what’ while service levels and demonstrated behaviour would fall under the ‘how.’
You may also choose to set a start and finish date for your goals, with milestones in between. This allows you and the supplier fair warning and time to take corrective action if they veer too far off track.
To ensure you remain aligned with your overall objectives and further motivate procurement suppliers, you may want to consider using the new and more progressive S.M.A.R.T.A.—Aligned or S.M.A.R.T.R.—Reward.
To track against your S.M.A.R.T. goals, you’ll have to take a data-first approach. However, collecting, aggregating and analyzing data through emails and spreadsheets can be time-consuming and prone to human errors.
Over the last few years, procurement technology solutions have seen massive growth. Increasingly, organizations are using cloud-based performance management systems that break down data and communication silos. Some offer little more than electronic appraisal forms, while others are more expansive, offering full performance and goal management.
Whichever approach you take, give careful consideration to how and what data points you want to monitor and any relevant market data you’ll require. Of course, you’ll want to ensure you have access to the data that allows you to evaluate progress against goals and make the comparisons necessary to support decision-making. You may even want to look for a system that allows you to drill down to item-level detail, update statuses and communicate back and forth on the nitty-gritty, all in one consistent platform.
If you require the supplier to provide you with any data, communicate this to them and confirm their capabilities at the beginning of the relationship or during the project kickoff.
Providing feedback in a timely fashion allows your supplier to respond and adjust immediately, correct performance plans, prepare contingencies and tackle any other obstacles that may be hindering outcomes. The squeaky wheel gets the grease, especially in procurement.
Without regularly tracking progress against goals, productivity is likely to dip as attention is quickly averted elsewhere. By having short but regularly scheduled performance talks, you keep your procurement suppliers’ eye on the ball and avoid any surprises come review time.
Create your governance framework—a schedule of mutually agreed-upon review meetings—with vendors and your key stakeholders. For example, your framework may consist of monthly contract or Service Level Agreement (SLA) performance reviews. In addition, quarterly reviews may focus on the supplier relationship and evaluating long-term strategic value.
To ensure ongoing resilience and risk management, you may want to set biannual reviews of risk mitigation plans. And to keep your organization and leaders aligned and further nurture the relationship, you could arrange for an annual executive review.
Your governance should also include a look back at past issues and any corrective actions taken. Were the actions successful in addressing the root cause? Is the issue ongoing? Was the supplier proactive and expeditious in dealing with the issue?
Lastly, a few extra tips:
If your team needs training on a specialized public sector procurement topic then please check out our topic based webinars: https://theprocurementschool.com/webinars-trainingformyteam/
By The Procurement School Without effective communication, relationships with your procurement partners can quickly become stagnant. This and undoubtedly negatively impact your team’s vendor performance management strategy and outcome. To nurture a supplier relationship that optimizes outcomes for both parties, performance management should be an ongoing and continuous process. Relevant feedback delivered when the supplier […]
The procurement of IT components and services comes with its own unique set of challenges and responsibilities. This encompasses cyber security and other IT services, hardware, and software products. One must aim to meet all business requirements and maximize the value of spend. Below we offer best practices for mitigating the many different areas of […]
By The Procurement School A Statement of Work (SOW), also referred to as Statement of Requirements (SOR), is a detailed description of the goods and/or services to be supplied under a contract. The job of the document is to clearly stipulate all services and deliverables required to fulfill a contract by defining the tasks or […]
The era of whistleblowing and the need for transparency and supportive legislation in public procurement By The Procurement School Whistleblowers can change the world. And the world needs changing. As dramatic as it may sound, real change requires brave actions and loud voices. However, unveiling corruption and fraud can come with repercussions and grave consequences, […]
It is often said that the best defence is a good offence. This proactive thinking is prevalent throughout our public procurement training, emphasizing the importance of carving out adequate time to do effective procurement planning. Part of that planning should include considering strategies for selection of the ‘best value’ supplier – which will vary depending […]
It is easy for procurement professionals to understand that the best indicator of how a contractor will do in the future is how they have performed in the past, but very few are working with a credible, objective and fact-based system for collecting and utilizing this information on a regular basis. And given the specific […]
By The Procurement School On September 21, 2021, Justin Trudeau, Canada’s Liberal party leader, was re-elected with a minority Government. As Trudeau will be leading the country for the next 18 months, we thought we would look at what re-election means for public procurement. It seems the Liberals are investing heavily into keeping up with […]
As the effects of the global pandemic unfold, governments the world over are looking to procurement leaders to restructure supply chains that are agile and resilient as well as leverage technology to gain procurement efficiencies. This has led to increased positions and career opportunities for procurement professionals — thereby furthering the need for, and increasing […]
Integrated Project Delivery is a construction delivery methodology successfully in use for decades in the US and parts of Europe. It is currently gaining traction in Canada. what is integrated project delivery, or IPD? There are essentially four construction delivery method options a project team can choose from. These four include: design-build, design-bid-build, construction management […]
Author: Debby Shapero ProppWhether you are contracting to licence or acquire custom software, hardware, or related services, IT procurement creates unique challenges and is often associated with high costs, complexity, and a relatively high rate of failure. Improperly informed IT decisions can be costly. These challenges can be daunting even to the most seasoned practitioners. […]