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Challenges, Critical Success Factors and risks. Supplier Management faces many challenges, which could include some of the following: Continually changing business and IT needs and managing significant



Supplier Management faces many challenges, which could include some of the following:

  • Continually changing business and IT needs and managing significant change in parallel with delivering existing service
  • Working with an imposed non-ideal contract, a contract that has poor targets or terms and conditions, or poor or non-existent definition of service or supplier performance targets
  • Legacy issues, especially with services recently outsourced
  • Insufficient expertise retained within the organization
  • Being tied into long-term contracts, with no possibility of improvement, which have punitive penalty charges for early exit
  • Situations where the supplier depends on the organization in fulfilling the service delivery (e.g. for a data feed) can lead to issues over accountability for poor service performance
  • Disputes over charges
  • Interference by either party in the running of the other’s operation
  • Being caught in a daily fire-fighting mode, losing the proactive approach
  • Communication – not interacting often enough or quick enough or focusing on the right issues
  • Personality conflicts
  • One party using the contract to the detriment of the other party, resulting in win-lose changes rather than joint win-win changes
  • Losing the strategic perspective, focusing on operational issues, causing a lack of focus on strategic relationship objectives and issues.

Key elements that can help to avoid the above issues are:

  • Clearly written, well-defined and well-managed contract
  • Mutually beneficial relationship
  • Clearly defined (and communicated) roles and responsibilities on both sides
  • Good interfaces and communications between the parties
  • Well-defined Service Management processes on both sides
  • Selecting suppliers who have achieved certification against internationally recognized certifications, such as ISO 9001, ISO/IEC 20000, etc.

The main CSFs for the Supplier Management process are:

  • Business protected from poor supplier performance or disruption
  • Supporting services and their targets align with business needs and targets
  • Availability of services is not compromised by supplier performance
  • Clear ownership and awareness of supplier and contractual issues.

The major areas of risk associated with Supplier Management include:





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