External Partner Alignment
In a new era world, organizations are focusing more and more on their core competencies and outsourcing the rest to the service providers. Considering that these external partners are part your largervirtual organization, it is must that your partner should be involved and aligned at various points in the planning and execution process. Given your relationship and commercials, the level and approach of involvement can be different. For example-you may involve your exclusive 3rd party supplier more than the one who is servicing your competition as well.
Overall its a simple concept. As you align you people and processes, you would extend that alignment to your vendor. Therefore you would place new measures and expectations from the Vendor, which will drive Vendor to redesign his processes and the kind of skills he has deployed.
Here are some opportunities and challenges for business partner alignment
Vendors are smart to figure it out
Because your Vendor's core business is related to his services to you, he typically will have many more tricks to achieve the changed expectations from you, as long as you are giving the right price for the same.
Vendors can give you ideas
A vendor can give you smart ideas on not only what can be done at his end but also the opportunities which you can pursue at your end.
Lack of flexibility with the Vendor side
If you are looking for a unique set of expectations, a Vendor may not be able to customize his offerings to you. If you are one of many clients of the Vendor and he is giving you cost-effective vanilla services, it will take time, money and effort for the Vendor to re-orient himself. It also depends on the size of the business, a vendor has with you.
Lower control and visibility with the Vendor
Good news is that a Vendor can be a black-box for you, and you may not worry on his work as long as he is delivering to his end expectations. However, if you want to make a change in your processes, this lack of visibility becomes a barrier. You would always like to challenge and work with Vendor to re-design his processes so that you can get the best outcome. However, a vendor may not like to provide that visibility. A whole lot depends on the in-house expertise you will have and your gravitas with your business partner. For example- Let us say that I have outsourced my IT infrastructure. If I need to have new server deployment TAT to be reduced from 2 months to 45 days, I may have to rely and mostly accept the solution provided by my partner. At the same time, if I have hired a Vendor for managing my collections, I may have enough financial processing expertise to negotiate and collaborate with the Vendor.
TIP- We strongly recommend that for large outsourced operations, you should have your implants at the Vendor's site. They need not be there for policing, but they can be coordinating any issues and also working with vendor to continuously enhance the processes. They will be your eyes and ears on the ground.
TIP- Have a balance between spreading the risk and having your gravitas with the Vendor. We recommend that for any specific business process, you may like to keep the number of your Vendors between 2 to 4. This is an indicative figure. Having your business done by multiple vendors introduces a level of competition across your service-providers. At the same time, spreading your portfolio across many vendors, limits the business you can give to a vendor (and this you weight with the Vendor) and also make difficult any change in the processes.
Here is how you can align your vendors
Include your business partners in the planning process
More entrenched the vendor is with you, more should be its participation in your planning process. Typically organizations do involve their strategic vendors in the planning process. This participation is on the following counts:
- Checking and confirming the assumptions we are making around your vendors. For example- Before you assume that your 3rd party servicing & repair vendor can extend his servicing network to 50 more locations within next 12 months, you should check it with the vendor.
- Tapping the brains of the Vendor on environment (for example, your 3rd party reseller can share the insights on market conditions, customer behavior and new product ideas).
Leveraging your vendor's capabilities
Sometimes, the vendor capabilities themselves can be a reason for your strategy.
example 1- You have tied-up with a bank for your banc-assurance deal to sell life insurance policies. Your bank has 20000 locations and has more than 500000 high net worth individual as its customers. The life Insurance company could strategize on building high value products to leverage this opportunity.
example 2- Let us say you have a strategic 3rd party distributor and the same distributor also offers repair & maintenance services. Given this capability, company may think of outsourcing the repair & maintenance activities as well.
Sharing your business plan
You may involve your Vendor after the planning phase is over. You can share the detailed business plan and strategy, which impacts the vendor. This will enable Vendor to plan and resource himself. It will also allow Vendor to change his processes according to your expectations.
For example- One your IT portfolio is defined for next year, you can share the portfolio with your key Vendors, so that they can work on building adequate skill base and availability of right resources at the right time.
Cross Pollinating with the Vendor
An organization and Vendor should be knowing the each othe's world to improve effectiveness. We recommend both parties to have their implants (their representatives in each other's location), for a reasonably sized association. You can make natural teams including that of the Vendor, where your business process runs across your own teams and that of the Vendor's. You can work jointly on quality initiatives. Some organizations having strategic tie-ups also include the key vendor resources as part of their own teams for all practical purposes.
TIP- It is always recommended to have Vendor knowing beyond what is needed for running his services for you. A repair & maintenance vendor may not only know how to service your product, but also your whole customer service and satisfaction strategy. The key resources of the Vendor should be taken through business awareness sessions, so that they can see a bigger picture and think accordingly.