Branimir Valentic Suppliers can be a great help. For example, there are probably areas of expertise that you need, but you don’t have them. It’s logical to look elsewhere for them, i.e., to find someone who has them. On the other side, if your suppliers are not performing well, that means additional problems for you and the services you provide. But, how can you know for sure whether they are fulfilling their obligations, or not?
As in many other cases, measuring is the answer. Supplier performance is the thing to measure, in this case. So, based on monitoring and measuring of a supplier’s performance, you will create a supplier performance report. ITIL recommendations and ISO 20000 sets direct requirements regarding this report. Let’s see some more details.
The importance
Why is it important to monitor a supplier’s performance, anyway? You selected your supplier based on the business objectives you wanted to achieve. Now you want to be sure that your supplier is fulfilling their obligation and supporting the agreed business objectives – so, you need to evaluate that supplier’s performance. By doing so you will learn two things:
- whether they fulfill their obligations, and
- once you get to this point, whether you should extend your contract with them – or not.
And, imagine that you are responsible, in the eyes of your management, for the suppliers and their performance. Keeping all relevant information in your head might work, if you only have one or two suppliers or if you don’t use their services often. But, when the number of suppliers increases – I don’t suggest trying to work that way. You need to manage your suppliers, meaning that you must define the relationship (Supplier Contact or Underpinning Contract) and know how they are doing, by starting a report on the supplier’s performance.
How about requirements and recommendations?
ITIL is not explicit about documenting suppliers’ performance. But, that doesn’t mean that a supplier’s performance is neglected – quite the contrary. ITIL emphasizes the importance of monitoring and reporting on supplier performance related to the affected IT service, quality of their work, and related costs. Even more, ITIL best practice recommends having a single place where all your information related to suppliers, their contracts, and reports are stored. That’s called a Supplier and Contract Management Information System. It could be the form of a database or network folder, but it’s important that you have a single managed place where all your information and knowledge about suppliers is stored.
On the other side, ISO 20000 sets direct requirements, in section 7.2 Supplier Management, to (regularly) monitor suppliers’ performance, measure it against service targets, and record and review it. The result: increased familiarity with suppliers’ performance, a better-managed supplier management process, and identification of nonconformities and opportunities for improvement.
Read the article: ISO 20000 Supplier Management – You lead the game to learn more about ISO 20000 requirements.
The content
Let’s see what the content of a supplier performance report might include:
- Performance – from the above explanation of requirements/recommendations, you would, certainly, include measurement of the supplier’s performance. Try to quantify such measurement as much as possible. For example, if the supplier is obliged (by the contract, read the article: ITIL Underpinning Contract vs. ISO 20000 Supplier Contract – Similarities and differences to learn more about a supplier’s contract) to provide certain availability, then the provided availability should be measured and compared to agreed (contracted) parameters.
- Operational parameters – your suppliers are, usually, part of the incident / problem management process. Your IT Service Management (ITSM) tool will help you get all supplier-relevant data related to incidents and problems. For example, how many incidents were resolved by the particular supplier, how many were resolved within the agreed time, how many of them were resolved outside the agreed time, etc.
- Feedback – most probably, you have many colleagues involved in the relationship with a particular supplier. Ask them to provide their feedback. In this way, you will get a more objective picture (the same supplier “seen” with different eyes). So, you could create a supplier satisfaction survey asking about the supplier’s efficiency, quality of work, speed of intervention, communication, etc. When the time comes for you to decide whether to extend the agreement with a particular supplier, this will be your valuable tool to do the supplier evaluation.
- Issues – document issues you have with the supplier. In this way, you will have an excellent overview of the relationship with that particular supplier, as well as a place where the issue is documented so that you can track its resolution.
Of course, depending on your own environment (i.e., suppliers, customers, and provided services), you will define your own content of this report. Management, with their own requirements, can also influence the report’s content.
For your own good
Once you start monitoring and measuring your suppliers and their performance, you have the foundation to be more efficient towards your customers. Your customers don’t see your suppliers. They see you and your performance. But, somewhere in the background, you depend on your suppliers’ performance and if you are not sure whether they are performing well or not … well, it will be hard to have confidence in your own performance in the eyes of your customers.
With a supplier performance report, you have documented information that can serve for analysis purposes. Once you start doing that, improvement initiatives will clarify. Improvements will make your services better, and your customers will appreciate that. What else could you wish for …?
Use these free ITIL/ISO 20000 Gap Analysis tools to check how well your Supplier Management process corresponds with ITIL recommendations and ISO 20000 requirements.
