CWS 3.0: December 1, 2010 - Vol 2.23

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Because You Asked - You're Fired!

I have taken over as manager of my company's CW program. It's only been 3 months, but I am not happy with my master supplier's performance. How do you know when it's time to fire a vendor?
 -- On-Edge in Oakland, Calif.

Dear On-Edge,
 
Even though you were not part of the process in selecting your master supplier, getting rid of a vendor is not an easy task.

I would proceed with caution. Here's why. Business partnerships are often like a marriage. Would you run to get divorced even if you are really irritated with your partner? No. You would first take a good, hard, honest look at yourself. The same should hold for dealing with rocky business partnerships.

Here's what we suggest you do: Examine your program and take a look at the metrics that matter to the company. The metrics involved may be time to fill, cost savings, customer satisfaction etc. If those aren't doing well, the first step you need to take is to take a look at what you may be doing wrong that may be affecting those results (maybe it's how the CW program is structured). Then scrutinize what you as a company are doing relative to what was agreed upon -- are you holding up your side of the deal?

Once you have done your homework and clearly understand what defines success with your vendor, have a face to face meeting. This is where both sides air grievances and thrash out issues. The relationship is assessed. And if you determine the relationship is too far gone, you go to the next stage.

Assuming you have done all of the above, the next place is to go to the contract. Here's where the attorneys come in. They look at various issues. What is the termination agreement like in your contract? There may be separation penalties for either party. Often, there were special signing bonuses built into the contract -- how would they be affected if the contract is not renewed? What about the temps currently in place? How are they going to be handled? Are you going to keep them or move them to a new provider? As you can see, there are many topics to think through.

Usually very few program managers want to blow up a vendor relationship, as doing so can reflect negatively on them. Some may threaten and cajole, but at the end of the day, firing a vendor could mean a financial penalty for the company.

However, penalties notwithstanding, here are some signs that tell you that it's time to reassess the relationship.

  1. When there are enough customer service failures that program compliance starts to plummet.
  2. Internal stakeholder satisfaction regarding worker quality is low.
  3. Process issues around acquiring and exiting candidates are not being resolved in a reasonable time frame.
  4. The company is moving to the next stage of evolution and its provider can't meet those new needs. An example would be if you are planning to branch into statement of work (SOW) and the vendor has no experience in that area, or you are expanding into a new region and your provider can't scale with you.
  5. Your tech provider's VMS in not on par with market offerings.
  6. You see a significant change in your vendor's financials. You need to protect yourself and get out.

Make sure you do your due diligence. Inspect the CW program and the vendor. Before you take any actions, know where the fault lies. Don't fire a supplier for an issue that you will just recreate with another vendor.

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