I’ve been reading articles and other blogs geared towards vendor management comparing the consequences of regulating vendor performance.

The general consensus:

• If vendor performance is good, they are rewarded with more business
• If vendor performance is bad, they are punished with little to no business.
• • This can become its own vicious cycle preventing the chance to succeed. Additionally, little to no business de-motivates the vendor to perform for their client. Thus, vendor disappears. It reminds me of the card games with a million names where the loser is punished to take another one or two bad cards “President, VP, etc”.

While treating our vendors as service suppliers that are constantly judged and ridiculed to meet performance metrics, is inevitably setting them up for failure. How will they ever surpass their performance when the measures are taken away from them?

Another question is whether their performance is agreed upon negotiations in their SLA? Probably not.

Rule 1: Define performance measures before signing MSA, not after.

Rule 2: Have measures setup and easily accessible for vendors to meet their expected performance.

Rule 3: Undergo annual performance reviews as you would with your employees.

Clients that are large enough to manage multiple vendors also have performance metrics developed for their internal use, whether to seek additional vendors, or start another bid.

As new vendors are signed on, they should have a complete understanding of their SLA’s before starting. If they breach, or come short wit their metrics, they cannot be excused. Most importantly beside each performance measure, conditions should also be outlined. This is does not only include punishable conditions, but conditions should they surpass their performance. Both the vendor and client must be liable. Vendors should be responsible to know the consequences and clients alike.

Possibly this is the HR side of me where everything must be documented and agreed where in the real world this does not exist. Although, wouldn’t vendors respect clients that also reward good behaviour? I would think that as suppliers and partners, outlined expectations allows for greater success.

Your thoughts are always encouraged.

Neha