What suppliers can tell you about your own business

So, you’ve set up a preferred supplier program to obtain maximum value from all of your IT suppliers. You design your IT contracts to get the best combination of cost and service for desired products, then monitor performance against the contract.

But are you really getting the most from these relationships?

Few companies with preferred supplier programs consult even their most strategic suppliers for input on creative ideas to improve IT. They’re missing out, because many suppliers can offer valuable insights. Think about it. Strategic suppliers share your most crucial goal: your long-term success. These suppliers work with many companies in a variety of industries, giving them a broad perspective that enables them to objectively gauge the relative effectiveness of different approaches to IT challenges. And their employees can provide suggestions unhampered by corporate politics.

A supplier’s fresh perspective could be helpful in several areas, including these:

Internal policies and procedures. From inside an organization, it’s easy to turn a blind eye to processes that work but aren’t truly robust. But outsiders aren’t committed to the status quo. In fact, suppliers often have incentive to make a client’s internal processes more efficient — for example, via outsourcing contracts that are priced with the assumption that the outsourcer will standardize processes and reduce associated costs. And a supplier’s staff will never believe that “we’ve always done it this way” constitutes a best practice.

And what suppliers observe often goes beyond processes covered in the contract. For example, the executive management team at one Fortune 500 company, having sought fixed bids for all new application work, was mystified when all the major systems integration firms declined to bid. Then a service desk outsourcer explained that the company’s requirements documents had consistently been incomplete, often resulting in massive additions and changes during a project. For the integrators, the fixed-fee contract was too great a risk. Management now demands comprehensive and detailed requirements.

Employee evaluations. You might use 360-degree reviews and organizational climate surveys, but you can still get additional insights from your suppliers. The major drawback of employee opinion surveys is that many employees believe that management can and will figure out who wrote which responses. The result is that many responses are guarded. Your suppliers’ representatives, however, can offer an objective perspective on your staff’s skills and morale, both from firsthand experiences and things your employees have said to them.

New trends. Strategic suppliers can alert you to industry trends long before they appear in the trade press. When a supplier informs you of an emerging trend — without a related sales pitch — pay close attention.

Some companies ignore or reject advice from external sources, on the grounds that “we know our business best.” This view is shortsighted. Suppliers offer an invaluable perspective, both within and across industries. But some suppliers are hesitant to volunteer information. They might assume that you already know about existing problems, or fear that they might offend you by drawing attention to weaknesses. Either way, it’s up to you to ensure that this potentially crucial exchange of information takes place.

Leverage your suppliers’ insights to foster mutual success. In the end, everybody wins.

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Jim Love, Chief Content Officer, IT World Canada

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