Daily Archives: February 25, 2016

The 8 Laws of Successful Supplier Transitions: Part II

Today’s guest post is from Brian Seipel, an information technology and marketing project analyst at Source One Management Services, a leading procurement services provider with over two decades of experience delivering procurement success.

In our last post we noted that there are plenty of reasons your organization may choose to switch suppliers. Perhaps your incumbent’s quality is slipping, or their prices aren’t as competitive as they once were. As you’ve grown, perhaps your incumbent supplier isn’t able to scale with your organization or keep up in emerging areas of your business.

However, switching isn’t always easy because transitioning to a new supplier is a scary thing, especially as there are plenty of risks. In our last post we noted that the first step managing risk is identifying risk, which we covered, and the next step is developing a strategy to manage the transition, which is the subject of this post.

Managing the Transition

Here are 8 basic commandments to follow if you want to avoid running into the risks above:

  • Before Committing, make sure your prenup is up to par.
    Nobody thinks about ending a relationship before it begins, but foresight here is crucial. Exiting incumbents can make life very hard if agreements don’t have favorable termination, survivability, and exclusivity clauses or if they fail to specify transition support owed to you in case of a breakup. Bake these items into your new agreement and all future contracts.
  • At all times, stay in the driver’s seat.
    Too often, organizations are happy to let suppliers control the implementation process. Don’t let this happen: Losing this control removes much of the supplier’s accountability, and is a leading cause for transition timelines dragging or derailing.
  • Start strong by bringing the team back to the table.
    Every new project we start with a client begins with a kickoff meeting, where all key stakeholders on both sides of the table meet. This meeting helps ensure roles are clearly defined and sets expectations for the level and frequency of communication moving forward.
  • … There is a “team,” right?
    The key corollary to the point above is — there needs to be a dedicated team. Part time committee members will always place more importance on their own day-to-day tasks, leaving implementation in the hands of the supplier (refer back to commandment #2). Put a dedicated team together, and make sure it includes members of upper management.
  • Consider the timing and scale of the transition.
    Identify the best time to make the switch based on your team’s workloads, inventory cut-in or service termination dates, and major events on your company’s horizon. Also consider whether a phased implementation may be appropriate — this will stretch your time line, but would allow more flexibility among resources.
  • Don’t jump immediately to transformation.
    Focusing first on transitioning to a familiar model and incrementally adding additional services of a new supplier can help keep a transition on track.
  • Establish an implementation calendar.
    This calendar should be accessible by all stakeholders and act as checklist of important events and timelines. Develop the calendar with suppliers to ensure they understand and can meet deadlines. For less business-critical elements of the implementation, allowing for greater stretches of time can avoid mistakes and start off a better relationship
  • Continue Communicating throughout the process.
    Remind internal stakeholders that the relationship will be most tested during implementation, and that focus needs to remain on the transition. Communicate externally to ensure the supplier keeps the full scope of work and related SLAs in mind throughout implementation and adheres to each milestone as it approaches.

Adhere to these commandments and your transition will be much smoother. Ignore them and you may find yourself dealing with some major headaches.

And If A Transition is Still Set to Fail

If you find your transition going off the rails, several speedy and decisive actions can bring it back on track:

  • Reevaluate the project plan and timelines for the transition
    At what point did the process go south, what can be done to correct, and how will the timeline need to be revamped to accommodate for a fix?
  • Changing out key players on both sides of the table managing the transition
    this may add to short term delays, but long term success. Hurt feelings always get trumped by botched implementations.
  • Reengage senior managers who quietly slipped away
    after the contract was signed and get them involved again.

Supplier transitions can be painful — but they don’t have to be.

The key takeaway is to never lose focus on a new deal just because a new contract was signed — all hands need to be on deck to ensure your transition to a new supplier lives up to the potential promised during the sourcing and contracting phases. This can seem painful, but strategizing the transition can take care of headaches before they crop up. Taking the right steps early on lessens the risks and moves the process into an opportunity to improve supplier performance and quality, streamline processes, and ultimately save money.

Thanks, Brian.