Contract Capital Management » Connecting

Tying some vendor management threads together

hudgeon — Sat, 08 Apr 2006 12:24:55 +0000

Earlier today, I reviewed my posts and decided that I should have tag-lined my blog "Sh*t happens. Deal with it". I intended to write about all aspects of vendor management but I've found I've focused solely on the importance of building sufficient flexibility into contractual relationships to allow them to handle unforeseen events that occur throughout the life of the contract.

In summary, the Vendor Manager must establish clear aspirational goals for the supplier relationship. Once they have established the goals and tied remuneration to the goals, the environment is set for a flexible relationship that can change with the times. If the parties are focused on the aspirational goals, they are more likely to be flexible [1] [2] [3] and to demonstrate innovation.

Of course the trick is tying remuneration to the goals and establishing suitable change control procedures … more on that later.

Technorati Tags: outsourcing, vendor management

Trust, service delivery and contract management

hudgeon — Sat, 25 Mar 2006 20:46:37 +0000

I have been thinking recently about the relationship between trust, service delivery and contract management. These three dimensions are loosely linked over the short term but tightly linked over the long term. For example, in the early stages of a relationship, a purchasers level of trust in their supplier is built largely on the supplier’s reputation and conduct during the contracting negotiations. The supplier’s contract management and service delivery may be abyssmal, but the levels of trust may initially be high. However, as time goes on, the supplier’s ability to deliver the services and their skill at managing the contract have a growing impact on the level of trust in the relationship.

The following diagram is my attempt to capture the dimensions graphically.

The vertical axis shows the strength of the contract management, the horizontal axis shows the strength of the service delivery and the size of the circle is determined by the trust in the relationship.

The interesting thing about the above diagram is that each quadrant has a particular circle size associated with it. The circle in the bottom left quadrant has a tendency to be small while the circle in the top right quadrant has a tendency to be large. Each quadrant is like an environmental niche that best supports circles of a particular size; although it is possible for outsized or undersized circles to live in that quadrant for a period of time.

At the start of the relationship, the circle is typically large but it can exist in any quadrant. As the relationship progresses, one of two things happen: either the large circle moves into the top right quadrant (its natural environment) or the circle becomes smaller.

Making interorganisational relationships work

hudgeon — Tue, 21 Mar 2006 07:04:25 +0000

M@n@gement, 8:4, Pitsis, Josserand, Clegg and Kornberger

M@n@gement has a terrific series of article in their special edition: Making Interorganizational Relationships Work. Of particular note is an article by Knoppen and Cristeaanse entitled A Transformational Lens on Supply Chain Partnerships in which they assert that “The transformational lens contributes by facilitating a more complete picture of partnerships than would be achieved by considering each of its constituent bodies of literature in isolation, and sheds new light on the temporal aspect of partnerships.” The paper discusses the overlap between transactional cost analysis, organisational design and network literature in analysing supply chain partnerships.

Connecting with others (Pt. 1)

hudgeon — Fri, 24 Feb 2006 01:22:28 +0000

The most important skill a vendor manager has is the ability to connect with others. A VM spends their day coordinating people with opposing interests. Those that succeed are able to find common ground and entice the parties to inhabit that ground. Those that fail are not able to do so. Those that fail miserably drive the parties from the common ground into opposing bunkers.

The connection skill-set is not difficult to build for those so inclined. Guy Kawasaki returns to this topic time and time again. Two of his best posts relate to what he calls “schmoozing” but that I would call “relationship building” (‘schmoozing’ has conotations of bald self-interest whereas ‘relationship building’ reflects the symbiotic nature of the act) and ‘effective emailing‘.