Monitoring your vendors’ performance is an essential aspect of any vendor management program. Tracking key metrics ensures that both parties in a contractual agreement are aligned to the technology and business objectives of the engagement, protecting against misalignment and building a trusting relationship between customer and supplier. Modern business strategies are now heavily reliant on outsourcing due to its multitude of benefits, from cost-saving to accessing specialised skill sets and resources. However, this makes it all the more challenging to effectively monitor them all.
Below are our 4 best practices for assessing vendor performance:
- Keep track of your SLAs
Service level agreements (SLAs) are a key component of any contractual relationship with vendors, as it defines what expectations need to be met by each party within the service delivery. SLAs that are well established will drive efficiency and clearly state responsibilities so that, if there are issues with the service, neither party can plead ignorance.
- Implement a Vendor Consolidation Programme
Establishing a Vendor Consolidation Program allows you to segment your vendor landscape and focus on the metrics that are relevant to each vendor, leading to a reduction in cost and limiting risk. Segmenting your vendor landscape allows you to measure high-performing vendors against key performance indicators (KPIs).
- Frequent reporting
A valuable dataset is one that is relevant and up-to-date. Vendor performance should be reported on a continuous basis, which involves setting regular reporting periods and automating reminders to your vendors of any metrics that are due.
- Drive transparent communication
After generating and evaluating your performance indicators, it is essential to communicate your findings with each supplier. Your vendor’s performance can only improve by be communicated their low-performing areas. You can also increase the efficiency of this best practice by implementing an automated process of communication.
The xLA Studio: A speciality tool for monitoring vendor performance
Here at BVA, we have released our new xLA functionality that allows users to digitise and track passes or failures against their metrics agreed between both the customer and vendor and activate service credits based on a service credit value underpinned by each xLA record. Request a demo or get in touch:
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