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Building a successful vendor/client relationship . Start with the Scope!. Scope of work, Defined. The Scope of Work consists of the document in the original solicitation (IFB or RFP) and the SOW that goes into the contract .
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Building a successful vendor/client relationship Start with the Scope!
Scope of work, Defined • The Scope of Work consists of the document in the original solicitation (IFB or RFP) and the SOW that goes into the contract. • A Scope of Work (SOW) is a document within a contract that describes the work requirements for a specific project along with its performance and design expectations. The main purpose of the SOW is to define the liabilities, responsibilities, timelines, and work agreements between two parties, usually clients and service providers.
Key Performance indicators • A well-written SOW will define the scope and Key Performance Indicators for the agreement. • These KPIs can then be used as a baseline to determine whether the service provider has met conditions of the SOW.
SOW framework • Like any relationship, two parties will naturally have different ways of working. It’s important to define the framework for how the newly formed team will work together. • It should be clear to all involved what constitutes success and failure. This means not only adequately describing the work, but establishing criteria that defines when something is successfully completed. • When describing deliverables ensure your language is tight with no room for uncertainty or ambiguity without using or expressing in more words than are needed. Leave no doubt in how governance and decision making is managed. If you’ve got a way of prioritizing or planning active work, spell it out.
Use Understandable Language • Although a SOW may be industry-specific, it is always wise to bear in mind the audience, which often includes other parties than just the service provider. Language should not be so jargon-filled and complex. SOWs should be written in precise language that is relevant to the field of business. This prevents misinterpretations of terms and requirements.
Be Specific • Whether describing the quality of work expected, when it is expected or how success and milestones are measured, the more details and quantifiable information one can provide, the stronger the SOW. For instance, instead of saying a task will take “a reasonable amount of time,” a stronger stipulation is “the specified task will take no more than four hours.”
Contract Scope of work • The SOW is the cornerstone of an effective contract, essential to its management and the mitigation of risks. • Keeping this at the forefront of one’s efforts can help ensure optimal project performance. • Once the initial scope of work is solicited and the contract is awarded, you should never just copy the one from the solicitation and put it in the contract. • Often times we will see SOW's with the language, vendor or offeror, when in reality, it should now be, Contractor. • The contract SOW needs to be fine-tuned with the deliverables, dates, and expectations that are specific to the now awarded contractor.
Why is vendor relationship building valuable? • Mutually beneficial relationships are established when the vendor is viewed as a supplier of specialist services. Vendors hold a wealth of knowledge relating to their products or services. A vendor also holds knowledge on utilization within industry. That knowledge helps you, as a client, achieve your objectives.
Top 10 Successful vendor relationship strategies • Communicate Often • Build Partnerships • Create a win-win situation • Measure performance, set metrics • Share Risks 6. Build Trust 7. Pay your bills on time 8. Share your vision and goals 9. When Mistakes happen, don’t point fingers 10. Know the contract
Communicate often • Poor communication is at the heart of most business failures. The inability to convey or receive important information from your suppliers can end up shaking the very foundations of your relationship. • Buyers need to communicate with their vendors frequently in order to transmit their requirements effectively and get a better understanding of their suppliers’ capabilities.
Build partnerships • A strong relationship works both ways. When you understand how a vendor chooses to operate, the process generally runs smoother. Be sure you fully understand the payment terms and types of documentation the vendor requires, as well as their preferred channels and time-frame for orders and deliveries. Adjust your orders to meet these preferences and give them as much lead time on orders as possible.
Create a win-win situation • Consider the many ways your priorities may differ from your vendors’. For example, your idea of “on time” might be within a week of the deadline, while your vendor prefers precision. It’s easy to take expectations for granted because they’re engrained in our company or departmental culture—or because we’re used to operating within a particular industry with stricter (or looser) norms.
Measure performance-Set Metrics • Organizations with the best vendor relationship process have an elaborate system to measure the performance of their vendors. Scorecards, vendor ratings, and vendor performance reviews are used to hold vendors accountable for their performance. • Establish a performance review process. • Maintain a record of all issued and resolutions.
Share risks • Uncertainty paves the way for a number of risks like price volatility, demand fluctuations, and more. Carefully designed vendor contracts reduce the amount of uncertainty, by enabling risk sharing.
Build trust • A truly effective vendor relationship management process is built on a foundation of trust. Buyers who ensure that their vendors are financially and emotionally invested in the relationship have a good chance of winning the trust of their vendors in a relatively short period of time.
Pay your bills on time • Just like you, vendors, product manufacturers, and wholesale distributors depend on prompt payment for goods and services. For vendors working on thin margins, cash flow is essential. When you consistently pay on time and respect agreed-upon conditions, you demonstrate appreciation for their contributions and your business rises to a “most trusted” status in the vendor’s eyes. This comes in handy if you need to call on the vendor for rush deliveries or other special requests.
Share your vision and goals • A vendor who “gets” your business is of far greater value than one who just goes through the motions of filling orders. Take the time to communicate your short-term goals and what you plan in the future. Invite their suggestions on the role they can play in achieving these goals. A trusted vendor will likely have unique insights into the industry and offer helpful feedback you won’t find anywhere else.
When Mistakes Happen, Don’t Point Fingers • Problems are inevitable on the occasional processing or delivering of an order. Your vendor relationship will be strengthened if, instead of finger-pointing and assigning blame, your dedicated vendor manager works with his or her counterpart to clarify the situation and take steps to ensure the same issue doesn’t crop up again.
Know the contract • With a firm understanding of the scope of what needs to be accomplished in a project, there is less need to throw contractual terms around during stressful discussion. This doesn’t help solve the problem, and pulling out a contract should be a last resort to end a dispute.
1. Set reminders long before the start of a renewal period. • An organization needs time to conduct reviews before a contract renewal is executed. Notifications need to be set well ahead of time to allow for thorough reviews.
2. During renewal reviews, consider what was changed in the last review. • Were changes made to the contract during the initial review stage, or during a mid-term review? Were any amendments made? During renewal reviews, make sure stakeholders are aware of those past changes. The review history of a contract can provide insights into the fluid terms of a contract and flag areas that need to be addressed.
3. Forward the contract and related documents to key stakeholders and internal departments. • All the information related to the contract should be forwarded on to the proper departments/stakeholders. Route the appropriate documents to these departments, and double-check to make sure they have all the information they need. If language or numbers need to be adjusted, make sure the reviewer clearly articulates to you what on the contract was changed and what changes need to be made on the upcoming solicitation.
4. Is key contact information still accurate? • Over the course of a contract lifecycle, titles and positions of the individuals involved with the contract can change. If an emergency arises, you should be able to quickly reach out to the right people to address the problem, rather than wasting time trying to find the right person. Check in with the individuals who were involved in the last review process. Make sure they are still the right person to work with during the renewal review. If not, ask them to direct you to the right individual.
5. After reviews, make sure key changes have been recorded. • If any key changes were made to the contract during the renewal review, be sure those changes are consistent through the rest of the contract. This includes updating any section that serves as an “overview” or “summary” of the contract. Make sure you’re keeping a record of what was changed, when and who made the change.
6. Set the dates for the next solicitation to release • Lastly, make sure to set the dates for milestones of the upcoming contract expiration. As mentioned in #1, depending on the contract, in some cases starting the procurement process can be done months in advance to avoid contract extensions or a lapse in service.
