Lessons from IT Vendor Management for Procurement: Leveraging Supplier Expertise and Creativity

Last week, I referenced an article Lisa Erickson-Harris wrote in Nearshore Americas, titled Vendor Management Heads Speak Out: The Trouble With IT Service Quality. It explored the measurement of IT services delivery and an initial lesson learned for procurement: look beyond metrics. Today, I’ll share another vendor management lesson learned: tapping supplier expertise. This matters in IT and BPO. And it most certainly matters in broader procurement as well.

The challenge that Erickson-Harris lays out is that there is often a limited “belief that they [outsourcer] can contribute expertise to [the] broader technology strategy of the company … [But] in reality, the outsourcer often brings knowledge that frequently exceeds best practices and has the advantage of significant industry experience to solve both process and technology challenges that arise.” In other words, IT and vendor management organizations, especially in the case of outsourced technology agreements or higher-value BPO initiatives, too rigidly focus on evaluating RFP responses and actual vendor performance off a static sheet of paper rather than tapping supplier creativity from the outset.

Changing such behavior in procurement, however, is not a function of supplier relationship management or supplier performance management alone. Rather, it starts with an upfront sourcing process that encourages supplier creativity by taking a more generalized (but thoughtful) RFI approach in contrast to forcing suppliers to bid a rigid apples-to-apples RFP specification. I won’t get into this topic in detail here, as we cover the area of advanced sourcing or sourcing optimization far too often because we’re so enthused by it. Yet equally as important in sourcing is tapping supplier creativity in between contracts. This can include understanding the latest in supplier R&D activity (especially important in such categories as packaging), as well as inviting engineers from the supplier to jointly collaborate on new specifications and designs (e.g., material substitution).

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