Services Procurement

Breaking up is Hard to Do

Your internal customers are complaining, your supplier is frustrated, you’ve worked for the past 6 months to turn around performance and sentiment but you just can’t get the improvement needed.  What do you do?

  1. Work harder!  You just need a little more time to convince everyone that keeping the current supplier is the best option.
  2. Find a new role!  The grass is definitely greener on the other side of the Procurement Organization.

When Service relationships are not working, it can get personal.  When the business is at risk, people quickly start taking sides, frustrations flare and communication gets compromised.  Moving away from a Service Partner is breaking up an important relationship – and like that Neil Sedaka song, perhaps the supplier is saying “instead of breaking up, I wish that we were making up again”  while you just want to move on.  At these moments, it is best to step out of the situation and set the emotion aside:

  1. Work with the business team to understand what changed, what triggered performance to miss expectations.  Perform a Why, Why analysis or other problem solving technique to be sure you have gotten to the root cause.
  2. Do the same exercise with your supplier.  Look for any clues that indicate either lack of understanding of the expectations (which would warrant more advanced tactics like employing a Performance Improvement Plan) or lack of capability to perform under the current and foreseeable future circumstances.
  3. Once you have diagnosed that your current supplier is not capable, you need to find an alternate approach to keeping the business running.  So you need to:
    • Clarify the business needs
    • Assess the market
    • Align your new strategy with your internal business partners
    • Begin the transition process

Presuming your new strategy indicates a change in supplier, the transition process requires very careful thought. Managing a supplier exit is more important than managing a supplier introduction. 

Managing a supplier exit is more important than managing a supplier introduction. 

Why?  The Service Provider is already on your site, performing some function that is helping you deliver your business objective.  Presuming no Gross Negligence or actions that will cause a Health/Safety incident, you likely want to retain the current supplier until your new solution is ready to be implemented, no matter the amount of extra work that is required to enable the supplier to meet your needs.

Here are some tips to help you navigate this challenging exercise:

Get Help!  You need to ensure your internal business partners understand the issue and the tactics you have taken to get improvement.  You need to share and gain alignment to the new strategy which involves moving away from your current provider.  And most importantly, you need to ensure you are addressing all the risks to the business.  Internal alignment and on-going communication is essential to protecting the business from any disruption.  Be sure to outline the levels of confidentiality needed during the transition.

Get moving! Once you are clear on the path to take, you need to inform your supplier.  This doesn’t mean you call a meeting and tell the supplier they are losing their business tomorrow.  You need to understand your Service Provider’s business situation and in particular, how critical your business is to their overall portfolio – are they likely to go out of business without your account?  Information on your supplier’s strategy and business dynamics will help you outline the tactics you need to take to influence your supplier to accept this change, to exit the relationship properly and on the right timing to synch with your replacement solution. And if there is a potential of the supplier going out of business, be sure to get advice from your Public Relations experts.

Stay professional! Remember you are dealing with people, people that may lose their jobs as a result of this change.  Stay firm but open to alternatives.  Perhaps a simple change in timing will enable the supplier to exit with dignity and to retain employees in order to support another client.  Make sure the supplier is treating his employees with respect as well.  In the end, it is the supplier employees that are delivering your business needs.  You don’t want them to walk off the job before the agreed timing. And, you never know when this supplier may be the perfect solution to a future business need so tell your supplier what would need to be true for him to meet your future needs.

Stay Alert!  You may be doing all the right things, but humans are involved and the business is constantly changing.  Ensure your internal communications channels are open.  Many times, the local team will identify something that could throw your plan off track – you need to be able to adjust so stay flexible and have a Plan B in your back pocket.

IMG_0501 Thoughts?Good luck and realize that no matter how challenging this Supplier Relationship Management experience may be, in the long run you are a stronger, more experienced buyer as a result.

Have you experienced a rough supplier transition?  Please share your approach and tips, I’d love to learn from you.

Share your comments below.

 

4 thoughts on “Breaking up is Hard to Do”

  1. Hi Eileen! Breaking up can be SO hard to do – especially when an incumbent has been working with us for many years! I appreciate you noting that we need to step aside and be professional yet remember we are still dealing with people who may face the real risk of losing their job due to the change. Also, as you know in some countries we even face barriers to exit due to local laws so we need to factor this in as well (and that makes breaking up so much harder…and longer!).

    Liked by 1 person

    1. You bring up an excellent point, Kate, regarding the TUPE Regulation – the Transfer of Undertakings, protection of employment applicable to many countries in Europe. Employees are transferred with all the current terms of employment they enjoy unless the new company can demonstrate an economic, technical or organizational (ETO) change in the work. This is another reason our choice to change or terminate supplier relationships is a serious undertaking.

      I recently had a case in So Africa where we changed to a new Service partner who tried to retain the current employee base – and all walked off – in a country with over 26% unemployment! Just goes to show that when humans are involved, sometimes the unexpected happens.

      And, this is the reason I find sourcing Services so fascinating – humans vs machines! How about you?

      Like

  2. Hi Eileen, relationship makes the BIG difference in breaking up. As you rightly said, we are dealing with human beings. So, we need to end up with dignity and respect while remembering that the world is small. Roads do cross on a regular basis. An account mgr at the company A can be working for company B tomorrow …
    What I believe matters as well, in the perspective of healthy relationship, are quantitative expactations. That is not always that easy to set up in the service industry. But it always makes things much simpler when performance is based on facts and figures: clear service deliverable definitions, how to measure each and minimum expected score for each. If performance deteriorates, scorecard helps to stay focus on improvement and to facilitate exit discussions if needed. It then also serve as base for the new comer …

    Like

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