Team Buying Club – Amanda Morley Feb 2023
In the first two posts of our Contract Management series, we discussed why an ongoing contract management solution is vital for ensuring that your contract remains fit for purpose, you receive added value and that your suppliers are meeting all the KPIs and SLAs. However, in reality, there may be occasions where you need to manage underperforming suppliers to ensure the contract’s quality is sustained throughout its duration.
Your role as a Buyer is highly demanding, which can often result in limited time to focus on contract management; so when a supplier’s performance begins to fail, excuses can be made in the hopes that it will sort itself out. However, if underperformance is left unchecked, it is unlikely to improve and might lead to an early exit from the contract, which has financial ramifications. To sustain the quality of your contracts, it is vital to manage underperforming suppliers as the issues start to arise.
Start by determining the root of the problem so you can reach a solution; be open minded as part of the problem may be due to communication issues or a lack of clarity. Next, meet with your supplier to discuss how to rectify the issues, it is rare that you’ll find a supplier unwilling to engage and improve performance. This meeting is your opportunity to raise all your concerns and address the issues, so make sure you follow an agenda and take minutes of your action planning, circulating them after the meeting with the agreed actions, owners, and timescales. Remember, Rome wasn’t built in a day and there are no overnight fixes, your supplier will need adequate time to deliver and sustain the improvements. You should also pre-schedule review meetings in advance, so you already have time carved out to continually review the progress.
How do you avoid getting to this stage? Preventing poor performance is the main objective, which can be achieved by building a positive relationship with your supplier from the outset. This can be achieved by having a transparent relationship based on collaboration and communication. When you review the underperformance ask the following questions to help you avoid being in this situation again:
- Was the poor performance addressed early enough in the process?
- Do you understand the supplier’s required performance, and do they understand your expectations?
- Do you have the right KPIs in place to manage performance?
- Are you continually evaluating the supplier’s performance?
Having a robust contract management process in place from the start and throughout the lifecycle of the contract will enable you to manage the supplier’s performance effectively, meaning it will be rare that you find yourself managing underperformance, particularly at short notice. The previous two blogs in our Contract Management series will help you effectively manage your supplier’s performance. Click here to read:
In the worst-case scenario, if improvements aren’t possible, you might find that you need to exit the contract early. In this case it is vital to have an action plan and timeline for exiting your contract in line with the contact terms and conditions. You’ll also need to manage the procurement process for your new service simultaneously to your exit timescales.
If you have any questions or concerns around contract management, contact Schools’ Buying Club via our free Procurement Helpline. It’s simple, fill in the online form, use the webchat or email [email protected] and our procurement specialists will assist you.