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Posted by Liz Herbert on November 22, 2010
We met with 30 Sourcing & Vendor Management Professionals during an action session at Forrester’s Sourcing & Vendor Management Forum in Chicago to discuss how to improve governance for large implementation projects. Clients were looking for help across the sourcing life cycle – from determining who manages the RFP process, to determining scope with internal stakeholders, to driving governance after the contract is signed.
What tactics are Sourcing & Vendor Management Professionals using to tackle these challenges?
1. Renegotiate rates with current players. Forrester’s recent survey found that 68% of organizations are renegotiating with their existing suppliers. One attendee said, “This has always been a priority, now we are bringing more efficiency and innovation to the process.”
2. Drive innovation from vendors. Everyone wants innovation from their suppliers but few receive it. Attendees shared tips for how they overcome major hurdles to achieving this in their supplier relationships:
a. Define what you mean by innovation. Many struggle to get innovation from their providers because they haven’t defined what that means — are you looking for idea-sharing or process improvements? Determine which type of innovation you need and communicate that to your vendor.
b. Identify metrics. “It’s not just how you measure innovation; it’s how you measure successful innovation.” Clients shared a variety of metrics such as:
i. Requiring the vendor to submit continuous improvement ideas they agree are impactful to your organization
ii. Number of ideas submitted for approval
iii. Number approved
iv. ROI of implemented idea
c. Drive vendor alignment to your business through incentives. One attendee has found success by using a reward structure for SLAs instead of the commonly used penalty structure. When the vendor hits the target set, they receive additional compensation.
3. Address challenges with internal stakeholders. Many attendees said their primary challenges are with internal stakeholders as opposed to the vendor. It is difficult to get your internal teams on board upfront, resulting in costly change-order requests. Attendees shared best practices such as:
a. Send an in-depth questionnaire to internal stakeholders during the requirements gathering process.
b. Use SharePoint to make documents (contracts, business goals, and drivers, scope of work) available for stakeholders to access.
c. Conduct a postmortem after the engagement ends to review lessons learned.
d. Run a workshop to have live discussions with your core team. Helps consolidate information you get from different groups which can be overwhelming.
We welcome your comments and insights!
Sarah Menard, Liz Herbert, and Caroline Roeleveld-Hoekendijk
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