Function: Indirect Procurement
Goal: Design a Contract for High Performance and Strengthen the Client/Vendor Relationship
How we helped a leading EMEA automotive client transform their Vendor management approach, increase Vendor engagement and improve overall Vendor and business performance results.
Grounds for Dissatisfaction
Our EMEA automotive Client was embarking on a period of significant change, driven by a ‘Premium’ customer-centric vision and mission. With a strategy driving significant change across all services, the focus was on driving higher levels of customer satisfaction, loyalty, revenue and profitability and reducing cost.
Multilingual customer acquisition, support and fulfilment services had been outsourced to a single Vendor for many years but our Client had not been satisfied for some time with the level of service and operational performance. The Client team had become dependent on the Vendor to manage the operation with minimal Client input but major fulfilment issues, questionable value for money and reactive account management had led to a poor working relationship and lack of trust on the part of the Client.
A Shared Challenge
There was recognition that both the Client and Vendor had contributed to the situation. The contractual and relationship framework did not support a high performance operation, the lack of key metrics limited objective measurement and management and the Client’s own stretched resources had allowed the focus on Vendor management to lapse. With the contract renewal date imminent, every avenue presented risk. The Client urgently needed to decide whether to move the operation at short notice or to take steps to address the issues until the requirements of longer term strategic changes taking place across the enterprise became clear.
Given the problems with the current contract and working relationship, changes needed to be made to drive improvements and also support transitions within the scope of the new strategy. Risk, timing and Client resource pressures required a cautious approach; could the Vendor operation be made fit for purpose in the Client’s ‘new world’ and if so, how could our Client ensure the relationship would deliver for both parties into the future. What improvements were feasible in the short to medium term whilst alternative plans could be developed if necessary.
Defining the Problem
In order to identify and address the underlying issues, Envisago Consulting conducted a Vendor site audit and reviewed the fulfilment operation. We identified process and performance management gaps that were impacting operational delivery and opportunities to better support our Client’s ‘new world’ objectives through improving quality performance and increasing efficiencies. In addition, we reviewed the contract and Statement of Work, identifying critical shortcomings and limitations to driving higher levels of performance.
Facing a rapidly approaching contract renewal date, Envisago restructured the contract and enhanced the Statement of Work to address the key areas which would have the greatest impact on performance. We also provided the Client and the Vendor with a clear roadmap of how to close the gaps identified during the audit, with an emphasis on both the hard quantitative elements and the relationship and management aspects that would be critical for a successful Vendor partnership.
Redesigning the Future
Since implementing the redesigned contract and the Envisago operational and vendor management recommendations, our Client has experienced improved operational performance and reported higher satisfaction levels with the Vendor relationship. Through more effective account management, both Client and Vendor morale has improved and a more collaborative working environment has developed. Through this closer alignment of the Vendor with the Client’s goals and objectives and with a revised contract that now includes high performance elements and requirements, our client anticipates that, managing to the contract, the operational and performance challenges will be more easily addressed and overcome to drive continuous improvement at both the business and Vendor performance levels.
“What I enjoyed most about working with Envisago was their professionalism, their integrity dealing with sensitive areas and handling of the people affected by the project"