Vendor Responsibilities: The 7 Key Things to Bear in Mind

By Allan Watton on
Photo Credit: Brenda-Starr

At Best Practice Group, our primary function is to advise businesses and organisations on how they can contract for high-quality outsourced services, at a low cost, that can meet their desired outcomes. Our ethos is to do this by ensuring partnership working between the client and its vendor.  As such, we are just as interested in a positive outcome for the vendor as we are for the client.  A win win situation with commercial trust at the heart of a good relationship.

In a perfect world, a successful outsourcing partnership is underpinned by a firmly-worded and well-understood contract that is put into practice with a suitable balance of flexibility, agility and preciseness. Unfortunately, from the relationships we see,  this is often not the case and can lead to a poor (or disastrous) outcome for both parties.

With the above in mind, in this post I want to focus on the seven key principles that all clients should be mindful of when their prospective vendor is providing a solution to their service requirements. If your vendor adheres to the following seven principles, they are far more likely to deliver to your requirements and help ensure you achieve your planned business outcomes.

1. Your Vendor Should Focus On What It Does Well

It can be very tempting for your vendor to go down the route of making promises now and worrying about how those promises will actually be delivered later. This type of approach typically ends badly — whether the outcome be manifested by poor profit margins or a complete breakdown in delivery.

As such, it pays the vendor to be very specific about the solution that it offers. I do not simply mean product specifications — I am referring to understanding your desired outcomes and assessing whether its solution is fit for purpose. If it does not take an objective view of the requirement/solution fit, then your vendor is likely to run into problems down the line.

Such issues often arise when a big potential contract comes along. It might be that your vendor knows it can deliver 80% of the service and assumes that it will figure out how to address the remaining 20% in time. Making this assumption rarely results in a positive outcome, however, as it is leaving far too much up to chance. And of what benefit is it to the vendor if, by winning a big contract, it makes its client unhappy, tarnishes its reputation and decimates its margin?

2. Your Vendor Should Know What It Can’t Do

With the above said, it is of no surprise that understanding what services your vendor is unable to provide (and the consequential impact) is just as important as knowing what it is able to do. Make no mistake — your vendor should be completely unambiguous about the boundaries of its solution and how those boundaries affect the potential outcome for you.

If your vendor chooses to ignore what it may not be able to achieve then it’s likely to run into trouble later, when it remembers that it is contracted to provide a solution for you that it does not offer. This can result in inflated costs (usually out of the vendor’s pocket, fortunately) and, more importantly, possibly a breach of contract. It is not a situation you want to find yourself in and is a sure-fire way to breakdown commercial trust.

I will talk about this in more depth later; remember that your vendor is probably contracted to offer expert advice — neglecting to mention that it can’t deliver to its client’s requirements is something that an expert provider can come to regret.

3. Your Vendor Needs to Have a Clear Bid Sign-Off Process

It is absolutely vital that your vendor has a clear bid sign-off process at all levels.

I am not just talking about the “aesthetic” qualities of its bid (i.e. that everything is presented in a neat and tidy fashion) — far more importantly, I am referring to it needing to do an in-house sanity check of its bid to make absolutely sure that it can deliver what it has promised.

This is a step that too many vendors forget to take in the heat of the moment, when it is all too easy to be blinded by the potential for landing what one might think to be a lucrative contract. However, the contract will be anything but lucrative to the vendor if it is unable to deliver what it has promised within its planned margins. And, if this happens, this can mean that in the longer term corners are cut short and impetuous into service delivery innovations and improvements can take a back seat. After all, they are not in it just for the ‘love of the job’.

4. Your Vendor Needs to Analyse Contractual Miscalculations

No contract will ever go exactly to plan, and any organisation worth its salt must learn from its inevitable mistakes and miscalculations. A vendor needs to calculate where it is loosing money and then seek to address this and understand why:

  • Is it because it offered its client advice and they’re not listening to the vendor/actioning this advice?
  • Is it because some part of the governance process (on either the vendor’s or the client’s side) is not working?
  • Is there some part of the vendor’s delivery process that is not effectively being actioned?

The questions can of course go on and on — the important thing to understand is that vendors must analyse the why in order to understand (a) what they can do to right the situation, and (b) what they can do in the future to prevent the outcome from happening again. Thereby clients are offered a far enhanced service delivery.

5. A Strong Governance Process Must be Followed

There is a key question that should always be on a vendor’s mind throughout the term of a contract: Does it have control over the people that are offering advice to its client? This question is so important because the advice that, you, the client receives forms the basis of the vendor’s service delivery. If the advice is not in line with your vendor’s contractual obligations, the vendor could soon find that the project wanders off course into areas that it, and you, had not anticipated.

At all times, a vendor must be sure that the advice handed to its client is validated against the contract and its client’s desired outcomes. Anything else should be superfluous. In this way, expectations over contractual misalignments should be avoided.

If the contract has been suitably worded, this should encourage innovation, rather than stagnancy. Any successful partnership should be just that: a partnership. Furthermore, that partnership should last for the duration of the contract — it’s not about a vendor “turning off” once its bid has been accepted and service delivery commenced. It needs to be on-going, particularly so in the longer term as business needs change and new technologies emerge.

6. All Actions Against Your Requirements Must Be Validated

A vendor must ask itself this: is everything that it carried out because it thinks it is right for the client, or because it thinks it is a good thing to do? There is a big distinction between the two.

Validating all actions against its client’s requirements starts with a clear set of requirements — your vendor shouldn’t be entering into a contract without knowing exactly what you, the client, hopes to achieve. Absolute clarity is key. As covered above, your vendor should have a very firm handle on what it does do and what it doesn’t do, and how well these factors align with your requirements.

Once the vendor is in this position, it must then ensure that all actions taken are within the realms of the contract (which should match its client’s requirements precisely). This is an ongoing process and should never be neglected through the course of the contract.

7. Your Vendor Must Respect Its Duty To Warn

We have spoken a lot about the vendor’s “Duty to Warn” on BPG’s Blog, so I won’t delve into the topic too deeply here. However, it is absolutely vital that your vendor has a well-developed understanding of the consequences of how it advises its client — both in terms of what it does say and what it doesn’t say.

In short, a vendor needs to:

  • Be clear about what it will deliver
  • Be clear about what it won’t deliver
  • Describe the consequential impact of the above to its client.

Vendors need to think dynamically about what they can and can’t offer their clients. To be a pro-active vendor, wishing to build a successful partnership and achieve both its and their clients’ business outcomes, it is vital that vendors consider what the client hasn’t asked for and ensure that all bases are covered. By working as a true partner, vendors are likely to avoid any issues concerning their Duty to Warn.