Poor Vendor Performance
INTRODUCTION
The relationship and performance of a vendor within a business is key to supporting the business and IT strategy. The use of vendors allows organisations to outsource non-core business functionalities in order to focus on the bigger picture of the organisation. Along with the use of vendors, comes a crucial aspect of managing vendors and measuring and monitoring their performance. There are various methods used to do this including, key performance indicators and Service Level Agreements (SLAs), but the most significant factor in monitoring and measuring performance in two-way communication between the customer and the vendor. Poor performance can lead to corrective action, and will go through a 3-step process of identifying the problem, putting an action plan in place and lastly (if needed) to go back out to market to find a replacement vendor.
VENDORS IN AN ORGANISATION
A vendor or supplier is a key component in most organisations as they allow non-core business functionalities to be outsourced to those suppliers across the world. This may be a part of a business strategy to reduce business costs and enhanced business services to key clients. The governance of a vendor is extremely important in this regard as to avoid potential service level failures, financial loss and business risk.
Vendor performance is a measurable performance of the vendor in delivering a service, product or agreed objective at the mutually agreed level of satisfaction. Thus poor vendor performance is the failure to meet the set standard by the supplier’s customer, which in turn has significant effects on the customer’s business.
Although it may seem unlikely to have a risk factor of zero, there are still processes and steps that can be taken to mitigate those risks and provide a cost effectively management of suppliers.
[pic]
BENEFITS OF MEASURING AND MONITORING PERFORMANCE
Performance management and measurement is important for any
The relationship and performance of a vendor within a business is key to supporting the business and IT strategy. The use of vendors allows organisations to outsource non-core business functionalities in order to focus on the bigger picture of the organisation. Along with the use of vendors, comes a crucial aspect of managing vendors and measuring and monitoring their performance. There are various methods used to do this including, key performance indicators and Service Level Agreements (SLAs), but the most significant factor in monitoring and measuring performance in two-way communication between the customer and the vendor. Poor performance can lead to corrective action, and will go through a 3-step process of identifying the problem, putting an action plan in place and lastly (if needed) to go back out to market to find a replacement vendor.
VENDORS IN AN ORGANISATION
A vendor or supplier is a key component in most organisations as they allow non-core business functionalities to be outsourced to those suppliers across the world. This may be a part of a business strategy to reduce business costs and enhanced business services to key clients. The governance of a vendor is extremely important in this regard as to avoid potential service level failures, financial loss and business risk.
Vendor performance is a measurable performance of the vendor in delivering a service, product or agreed objective at the mutually agreed level of satisfaction. Thus poor vendor performance is the failure to meet the set standard by the supplier’s customer, which in turn has significant effects on the customer’s business.
Although it may seem unlikely to have a risk factor of zero, there are still processes and steps that can be taken to mitigate those risks and provide a cost effectively management of suppliers.
[pic]
BENEFITS OF MEASURING AND MONITORING PERFORMANCE
Performance management and measurement is important for any
References: Supper Performance Measurement and Management Solution – Metric Stream, 2013, viewed 13 April 2013 New South Wales Corporate Services Reform Team, 1999. Service Level Agreements: guidelines for public sector organisations, viewed 13 April 2013 2007. How Cisco IT Improved Strategic Vendor Management, viewed 18 April 2013, Aberdeen Group, 2005. The Supplier Performance Measurement Benchmark Report, viewed 14 April The IMPACT Programme, 2005. IT Governance: Developing a successful governance strategy, The National Computing Centre, UK, viewed 12 April 2013