Principles for engaging a supplier: one perspective
It occurred to me that I’ve spent a lot of time representing the sell side of the outsource equation, and that it would be good to get some buy-side perspective. So, when I was speaking to Cal Ambrosy (manager of Global Service Delivery, Initiatives & Mobility Services for GE Corporate – Employee Services) a couple of weeks ago, it seemed a perfect chance to see the world from his point of view.
Cal’s organisation works with a number of suppliers and in the ten years that Cal has worked with the organisation, he and the team have developed some principles when engaging and working with suppliers …
1. Lower-cost is good, but better is best
Cal and team look at outsourcing the processes and services that they feel a supplier can deliver better and more cost-effectively based on the supplier’s core competencies and technical/process capability. The key is evaluating the advantage the supplier can bring to the end result on the customer experience.
2. Niche is OK, but ability to scale matters
It’s important to find best-in-class suppliers… In some cases, a niche supplier may work for a particular process or service, but keeping in mind scale and volume is critical. Going back to point one, Cal and team really look at the advantage the supplier can bring in relation to what’s trying to be accomplished.
3. Retain control: ensure balance between suppliers, don’t put all your eggs in one basket…
Keeping options open when it comes to suppliers can be very important. Cal and the team have learned that, in general, companies are not turning everything over to one supplier anymore. Another important principle: “Don’t hand over the keys to the castle.” Organisations need to retain the process knowledge and the ability to move from one supplier to another if a particular arrangement does not work out.
4. Your mess for less never works
Resisting outsourcing until processes are harmonised and streamlined internally is critical. As Cal says: “Your mess for less never works.”
5. In-house capability to do the deal puts you in a strong position
Having in-house sourcing and legal capability, as well as strong internal supplier managers, can put you in a strong position overall. “Everything is done in our language, the Master Services Agreement is in our terms, the Statement of Works is in our terms, which means we really understand the scope, how the outsource will work, the metrics etc.” Cal says. This puts Cal’s organisation in a strong position when the in-house sourcing team hands over to the in-house supplier managers.