Managing Vendors – Articles by Jim Everett

Tips on managing vendors, skills and competencies required

Select the Right Vendor/Provider

Posted on | November 13, 2008 | CLICK HERE TO COMMENT OR ASK QUESTION

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You can listen to or download the extended version as an MP3 file here

One of the first things a client asks a potential provider is price. And, when there are responses to an RFP (Request for Proposal), the eyes go straight to the bottom line.

Sure, price is important, and you do have a budget constraint. But cost needs to be weighed with the level of service and quality the provider has outlined in the proposal.

And even beyond simply weighing the price and services, there are key factors that influence the results you will get, and what it will take to manage the provider and relationship.

Contingency. What happens if a key resource your provider uses for your project gets sick or leaves? Will that impact your project, and does the provider have any backup. Is there a scarce or unique expertise, around which your project revolves?

Timeline. Are provider resources allocated for specific time blocks in a project timeline? What happens if the project slips at your end, or needs to be wrapped up for earlier completion? Will those resources allocated to your project be available?

Scalability. Is the provider equipped to deal smoothly with greater or lesser work loads as the project moves forward?

Briefing. You will invest effort and time to bring the new provider up to speed. Will this briefing then be passed on within their company to the resources carrying out the work? Or even to a third party? Will the same set of resources stay with your project, or will they turn over? How well will all the details, as well as the nuances and specific requirements, get communicated, and stay communicated?

Halo Effect. Take care that you do not ignore a knockout factor in a crucial area and select a provider that could be unsuitable, simply because you like working with them and they have strong attributes in other areas.

Discomfort. If you or anyone on the selection team feels uncomfortable with the provider, it is worth exploring further. Find out what it is the creates the discomfort. It may be unfounded, or it may be an intuitive sign of something that is not right.

Persuasion. Are you finding yourself over-reliant on the provider’s promises, without the necessary validation and due diligence to ensure that they have the capacity and intent to meet these?

Problem-Solving and Crisis Management. Do they require a whole crew to be assembled before they can act? Are they in alignment with your company in their methodology and approach to handling issues? What is their escalation path and process. If it is too many levels and cumbersome, they may be slow to take action.

Staffing. Are they equipped with the people and talent right now to begin, or do they have to gear up? Can they get the resources and bring them up to speed in time, or will it be a problem? This is one area of the provider’s business you do need to concern yourself with.

Financials. How well placed is a provider financially, and with the market leverage, to get the resources for your project. Do they have the business model to secure the resources within budget limits? If your provider is going to have a budget issue, ultimately that will affect you. What will their supply chain look like, and will it affect your level of control over the project?

Pricing. Before you engage a provider you need to go through with them the key assumptions their pricing is based on. If their pricing is wrong in one way or another, or there are hidden costs, it will come back to bite both client and provider.

This posting is an excerpt from Episode 8 in my audio podcast series, Managing Vendors, free on iTunes. Or, you can download and listen to full version of all podcasts, as well as a full PDF transcript, from the Podcast Page on the Think180 site

Listen to or download Episode 8 here

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