This month's news
The nature of management has changed in many businesses. Increasingly managers are asked to manage a range of different and often complex relationships. Compare this to old-style business structures when managers were responsible for the leadership and management of an in-house department. Whilst not an easy task, it was well defined, the parameters were clear. The emergence of more fluid company structures means that now managers can be managing project teams, virtual and remote teams, and partner organisations often simultaneously.
The result? Managers who have historically managed in-house staff are now responsible for managing an external organisation. In appointing a supplier the company specialists will be involved - purchasing, legal, risk management and so on, who will have a responsibility with the functional area for establishing the contract, the service level agreement, and defining the key performance indicators. However, managing the contract and the ongoing relationship often falls to the line managers in the business.
Arguably leadership and management are about the same thing - regardless of whether you are managing an in-house team or a third party. But there are differences.
There is a greater level of complexity and often implication in managing an external supplier. For example, if your business needs have changed so the service levels with the supplier need to be amended, this will involve some contract re-negotiation, which may have financial implications. This involves a lot more than setting new objectives and standards with an in-house team.
As important as managing the process is being able to manage the relationship. A business arrangement based purely on the contract is unlikely to result in the best value for your organisation or the supplier.
For each project we work with the client to ensure that the principles of effective supplier management are set in the context of their business and of the participant job roles.
At a headline level typical topics in such a programme are:
Each programme we develop is specific to a client, but we can provide you with some example materials which would illustrate typical content. For further information including client case studies please click here.
The Growing Importance of Supplier Management
How many of your managers are responsible for managing external supplier and outsource relationships? How critical are these externally provided services to the effective running and profitability of your business?The nature of management has changed in many businesses. Increasingly managers are asked to manage a range of different and often complex relationships. Compare this to old-style business structures when managers were responsible for the leadership and management of an in-house department. Whilst not an easy task, it was well defined, the parameters were clear. The emergence of more fluid company structures means that now managers can be managing project teams, virtual and remote teams, and partner organisations often simultaneously.
The Growth of Outsourcing
One of the biggest trends in recent years has been the growth of outsourcing. At the extreme some businesses have taken the view that if an activity is not part of their core business they will outsource it to an external organisation. This means that I.T. services, facilities management, pensions, call centre, payroll, fleet management and many more functions have been outsourced.The result? Managers who have historically managed in-house staff are now responsible for managing an external organisation. In appointing a supplier the company specialists will be involved - purchasing, legal, risk management and so on, who will have a responsibility with the functional area for establishing the contract, the service level agreement, and defining the key performance indicators. However, managing the contract and the ongoing relationship often falls to the line managers in the business.
Arguably leadership and management are about the same thing - regardless of whether you are managing an in-house team or a third party. But there are differences.
Common Concerns
Frequent concerns and questions raised by people involved in supplier management are:- How do I get share of mind? We are not their only customers.
- How do I make sure that they deliver against the standards that are agreed?
- What happens if they do not perform against the KPIs? How do I escalate the issue?
- We do not want to get to the point of waving a piece of paper, shouting "breach of contract"
- How much time do I need to spend measuring their performance?
- How do I make supplier reviews an effective forum?
- How much time do I invest in developing the relationship?
- Do I want a supplier or a partner relationship?
- They are critical to our business, who has got the greatest leverage?
There is a greater level of complexity and often implication in managing an external supplier. For example, if your business needs have changed so the service levels with the supplier need to be amended, this will involve some contract re-negotiation, which may have financial implications. This involves a lot more than setting new objectives and standards with an in-house team.
As important as managing the process is being able to manage the relationship. A business arrangement based purely on the contract is unlikely to result in the best value for your organisation or the supplier.
Developing Line Managers to Manage External Suppliers More Effectively
Matchett has an established track record in helping managers manage external supplier contracts more effectively. Over the last eighteen months we have worked with international banks and manufacturing companies on their supplier management skills. We have worked with managers responsible for managing a range of outsourced services from logistics to pensions, transport to business-critical I.T. services.For each project we work with the client to ensure that the principles of effective supplier management are set in the context of their business and of the participant job roles.
At a headline level typical topics in such a programme are:
- Supplier life cycle - this provides an overall framework
- Supplier selection criteria - this also provides the basis for on-going assessment of the supplier
- Managing the RFP and ITT process, for managers involved in appointing suppliers as well as managing existing contracts
- Risk assessment
- Establishing and working with the service level agreement (SLA)
- Defining the key performance indicators and how they will be measured
- Managing supplier review meetings
- How to develop positive supplier relationships
- Supplier or partner - defining the objective
- How to move from a supplier to a partner relationship
- Managing performance issues and disagreements
Each programme we develop is specific to a client, but we can provide you with some example materials which would illustrate typical content. For further information including client case studies please click here.
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