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Three Steps to Faster Vendor Relations and Supply Management

IT teams are looking for ways to do everything more quickly, including purchasing and supply management.

Speed driving“Matrixed” organizations are not a new idea (see this from a 1978 edition of the Harvard Business Review) but modern businesses require their employees to work with  – and depend on – more colleagues than ever before to accomplish their work.

While this increase in interconnections can make for more successful and collaborative projects it can also mean unclear or bureaucratic processes and duplicative work. And this is a problem for IT teams in particular because, now that technology is such an important component of almost any project, IT’s input is required more often than not.

As a result, the world’s IT functions are all looking for the corporate equivalent of rocket fuel right now: they are under a lot of pressure to do their jobs more quickly. CEB data suggest that CIOs should look at how IT works with with other functions: 30% of all slow handoffs occur between IT and other central corporate groups, e.g., procurement, finance, and legal teams.

Mainly, IT struggles to work with these corporate centers because each separate function puts processes in place that may make it more efficient internally but adds burdens and additional process steps for everyone else, including IT.

How One CIO Sped-Up Vendor and Supply Management

One of the leading CIOs in the CEB CIO network has recently made big changes to cross-functional handoffs that were slowing IT’s ability to negotiate and establish vendor agreements.

The CIO knew the IT vendor management office (VMO) was well positioned to speed up these kinds of handoffs but it couldn’t assume all responsibilities without creating another bottleneck. So instead of giving the VMO direct responsibility, he asked it to play a facilitator role. There were three components to the approach.

  1. Shift vendor and supply management responsibilities within IT: As the company increased its vendor relationships, the VMO struggled to keep up with vendor management demands, as well as work with corporate groups to bring new vendors on board.

    Rather than give the VMO more resources, the CIO realized IT service managers are well positioned to understand the what benefits – if any – new vendors would bring. Therefore, day-to-day vendor management activities and new vendor identification responsibilities were shifted from the VMO to IT service managers.

    By shifting responsibilities, the VMO had more time to act as a facilitator and help individual IT service managers either deal with vendors or with colleagues.

  2. Reduce the effort involved in vendor relations management: Although IT service managers now had more autonomy, it still took too long to start working with new vendors because of poor handoffs with groups such as Procurement, Finance and Legal.

    In its new facilitator role, the VMO assessed the process steps necessary to start work with new vendors. It asked functional groups to identify common mistakes by IT, and IT to identify areas where demands from the functional groups created high effort. By highlighting any misalignments, the VMO could then spell out specific cross-functional steps to simplify and streamline the process.

  3. Focus IT training on areas of high-risk for cross-functional stakeholders: The VMO provided service managers with training that aimed to rectify the costliest mistakes revealed in the fact-finding mission above.

    The VMO also collaborated with functional groups to create detailed training materials and introduce process guardrails. This increased the confidence of colleagues outside IT, and reduced the oversight that IT service managers had to provide.

 

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