Managing Vendors – Articles by Jim Everett

Tips on managing vendors, skills and competencies required

Help Vendors Prepare in Advance

Posted on | June 4, 2009 | CLICK HERE TO COMMENT OR ASK QUESTION

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Smart outsourcing project managers can keep an unsigned vendor in readiness, even if other project activities are holding up the ability to sign the vendor up and engage them fully on the project. Have the vendor sign an NDA so you can share useful project material and information to the vendor that is easy for you (helps them get up to speed);  have the vendor start with a simple pre-project or preparation phase (low-cost and no larger obligations); get important but easy things done early, that may otherwise hold up progress later (like allowing them to review broad master agreements in advance) .

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Suppose you, as an outsourcing project manager in a client company, have a new project that will use several key vendors. And there are lots of stakeholders and sign-offs within your company. You need to get all your ducks lined up, and you have more to do than you can manage. You have identified and spoken with all the potential vendors, but some you cannot engage until others are actually signed up with formal agreements. Time is passing, and some of the vendors you have lined up, but who have not yet been given the green light, are getting restless. They keep calling you to find out what is happening.

On the other side of the arrangement, the vendor you urgently sought out and prepared a couple of months back, has been in readiness. For a while it was OK to have nothing in writing, and be open to a flexible start date. But they have created readiness in a supply chain, or brought in other vendors to partner with to deliver for your project. At some point, it may no longer be feasible for them to be on hold. Especially if there is preparation that needs to be done, and they have other clients with projects.

What typically happens is that you finally get the go-ahead from stakeholders in your company, you get executive sign-off to proceed, the primary vendors are signed up and engaged, and you are ready to bring on the next tier vendors now that everything else is in place. The only problem is that instead of a month lead time, these last vendors have only a week, and have to scramble like crazy to get started and meet the sudden deadline.

Last minute scrambles are very wasteful. Some of the investment and time you put in to preparing the vendor, briefing them, and getting them enthused has dissipated. They may no longer have the time blocked out. After all, they are running a business too. The research and preparation they did is no longer at the forefront. It is rather like an athlete or sports person warming up before they go on the field, and then having to wait for a long period without knowing when or if they will be asked to perform.

And we all know that last-minute scrambles are much less efficient than planned timelines. So the vendor burns up resources and time on logistics, instead of adding quality and value. Sure, they will meet the terms of the agreement, but the extra efforts they could have put in to exceed your expectations have been burned up with the inefficiencies of the last-minute engagement.

But, in fairness, you were just so busy with all the other things that had to get done. There is no way you could have negotiated and created that agreement and got approval. You did not even know the whole scope of work until the other primary vendors were lined up. No way you could have brought that secondary vendor on any earlier. Or was there something you could have done?

This is where three techniques can help you:

  1. Phase Zero approach
  2. Critical Path planning
  3. Low-cost, high value actions

Phase Zero approach is simply a way to create a basic agreement so a vendor can plan and prepare. There is no commitment for the larger project and investment, but the vendor is able to allocate time and resources in getting everything ready for when the main agreement is signed and the larger engagement starts. It allows key items on the critical path to readied or completed in anticipation, such as researching all the business and product background, and creating some processes, and even helping you scope out the project (if you don’t trust them on this, you should not be doing business with them).

You only use this Phase Zero approach when you have decided on the vendor (that is, not in the bidding phase), and you think there is a better than even chance that they will be engaged. Sure, there is a risk that you may not go ahead, and you will have spent that smaller amount preparing for a project that did not proceed. But all business is a risk, and you weigh up the costs and advantages. If it means a great deal to have the vendor primed and ready to deliver great results, and prevent starting delays from blowing your critical path away, then a Phase Zero is a good investment.

Critical Path planning is more than just a technique, it is a discipline and a mindset. If you have studied Project Management, you will be familiar with it. A critical path is made up of a chain of sequential events, where each next event depends on the previous one being completed. You cannot start the next task, until a previous task has been completed. The least flexible chain of time-sensitive events is the critical path. There may be many paths close to critical, where a delay in another area takes out all the flexibility in timing.

So what are the critical path tasks in your project? Are there any that can be done before the major agreement is completed, just to give more breathing room in the critical path? And allowing for how busy you are with everything else, what can be done at low cost, low risk, and low investment of your limited time? And which of these will be essential elements of the eventual project, or be high value to the vendor in readying for the project?

Low-cost, high-value actions:

  1. Get the NDA (non-disclosure agreement) signed and in place. It does not commit anyone, but it does allow for information sharing.
  2. Provide the vendor with any Master Agreements your company will require them to sign later. That way they can be reviewing them and making any requests for variances (and that can really slow things down if you leave it to the last minute).
  3. Share (under NDA) as much background material and details of the project, so the vendor can be studying these and being ready.
  4. Give the vendor as much detail as you can about the scope of the project, and estimates where you are awaiting other things to fall in place. Keep them posted on changes, so they can adjust their own planning and commitments, and be as ready as they can to accommodate the work when it starts.

So by taking these steps, you are truly managing the overall project, quality, value and resources, rather than just being a reactive operative at the effect of everyone else’s timing. And notice that most of the effort is shifted to the vendor, and has low demand on your time.

Is there risk? Sure, a little, but you can contain these, and get stakeholder buy-in on the smaller steps. Is it extra work? Sure, a little, but much less than effort than trying to rescue a potential disaster or sub-par delivery because of an impossible critical path. Does it take the finesse of a corporate entrepreneur? Sure, to some extent, but that is what was expected of you when you were given the role.

Another by-product, and a good one, is that dealings with the vendor will be more collaborative, and the vendor more enthusiastic about working with you. Even with all the agreements in place, a good relationship and highly motivated vendor mean much better results.

You can do it, and be a Project Management star!

And for information on preparing the vendors (“onboarding”) or what you can do to plan company-related training for vendors, visit the Think180 site page on this topic.

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