Five Steps to Keeping your Vendor

I started my earlier post Five Steps to Keeping your Business with comparison of an offshoring engagement to a bad marriage: courting, expensive wedding, honeymoon, initial struggles, mundane irritation, aggravated frustration, and bitter divorce. The post touched upon the most important steps vendors should take to keep their business. Now let me cover the buyer’s side. And first let’s discuss a couple reasons for keeping your vendors. Of course if a vendor fails your expectations by a large margin there are not too many reasons for keeping that vendor, if any. If the vendor is perfect the thought of changing them is rather unlikely. (Please do let me know what your vendor is in this case, so far I fail to find one!) The question is relevant to vendors that in general deliver on expectations and sometimes exceed them and yet are in many ways imperfect, sometimes even worse than that. To some degree these reasons for keeping the vendor summarize to “Don’t fix if it’s not broken” –

  • You have invested in building the relationship by going through the process of selecting the vendor and the pains of establishing the relationship. You might be in early stages of realizing ROI, so why stop?
  • There are probably some problems with the vendor; there will be problems with the new one. Switch for the sake of a switch do not buy you a way out of problems, just changes the pain location.
  • If the issues you experiencing with the vendor are lower than your threshold for them you can probably ignore them. At some point the pain become ambient and by all means you can go on as if it did not exist.

So after you regular What-If analysis and weighing in Pros and Cons the vendor seems worth keeping. What are the steps for keeping the vendor? Oh, I see another question coming. What do you mean by keeping? Where is the vendor going? There is a contract preventing them from leaving, plus why would they ever leave if I pay them regularly and more or less on time?

Well, there are reasons they might leave, but it’s not the point here. The question is what you should do, what steps you need to take to prevent the relationship from deteriorating to a degree you would have to break the engagement.

1) The first most important “step” you can take is to help your vendor with their “five steps”, in that light you have five “sub-steps” to start with, all of them boiling down to clear and open communications:

  • The first step in Five Steps to Keeping your Business was focused on communications and in particular establishing and sticking to communication plan. That is one of the areas that require equal dedication of both parties. Work together with you vendor to define a meaningful communication plan and stick to it. As the landscape of the engagement changes you might need to revise your plan. To work the plan should be applicable to the current situation, efficient and agreed by both parties.
  • While you can not really help your vendor to be more flexible or more prepared for change, you can keep them aware of changes in your needs, structure, requirements, etc.
  • Helping your vendor with account management can be addressed in many ways, with the most important being allowing him / her to be the best AM they could be, manly through direct and open communications. Some organizations go as far as picking up the expense of AM, I don’t like that approach. I think paying for AM should be a part of vendor’s skin in the game.
  • Consistently providing your vendor with a clear picture of your expectations and assessment of quality is exceptionally important. Do not ignore those surveys and questionnaires – they may prove to be more value than you think of them. Be honest in rating and prepared to substantiate your answers. If your vendor doesn’t bother you with quality survey – volunteer those at least on quarterly basis.
  • When appropriate make you personal wins known to the vendor, position them appropriately as optional / secondary while still important. That should not be a tricky process unless your personal goals are in conflict with organizational; and in that case you may have much bigger problem to deal with… Anyway, isn’t it what the golf is for?

2) Get to know your vendor. Understanding your vendor’s internal driving forces and organizational dynamics can help a lot in forming the strategy and being successful in keeping the vendor in a long term. Learning your vendors’ organization both on macro level (at the organization level) and micro (team / individual) level is better done on their territory. It is also important to have the knowledge distributed through your organization, and one of the best way to do that is to acquire the knowledge through multiple channels, e.g. have multiple people from your team travel and work at the vendor site.

3) Help your vendor to become a stronger partner. Honest and timely feedback is just one of the ingredients. Technology exchange, methodology training, mentorship, etc. You organization can have enormous potential in helping your partners in building their expertise. Think about investing in your vendor the way you invest in your employees. There is of course important boundary here, you do not want to become overly dependent on your vendor or invest in them too much.

4) At some point, when you have established sufficient level of trust and experience with the vendor you can become a reference account. Helping your vendor on sales side plays in your favor in several dimensions – making your vendor stronger, making them more dependant on you as well. Don’t take reference account too easy and by no means let your vendor take it for granted or you can put your company’s and own reputation at risk.

5) And finally a step that might sound controversial nevertheless it is exceptionally important – stay with Disposable Outsourcing Model. There many reasons DOM helps you to keep the current vendor by removing the anxiety and reducing tension. Operating within DOM helps the vendor deliver to your requirements and deal with typical issues such as staff turnover. There is a lot to be said about DOM support in this case, but taking 180 degree turn I must say that if you fail in every aspect mentioned above and only did well on DOM implementation you are still golden since it doesn’t necessary that painful for you to fail in keeping the vendor, and in some perspective with ultimate DOM you can always keep the “vendor” while underlying provider changes…

While there are more steps / actions you can include in this list I think the main one are covered, as always I’d really appreciate your ideas though.

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