Most organizations, including investors, do no more due diligence than the examination of a few documents and financials, talking to sales reps, performing a short hands-on trial of the product, and then going live (or investing $5-15M). Is it any wonder that 50% of software projects fail?
How much do you know about your suppliers before you enter into an agreement with them?
How closely can you see what your suppliers are really doing?
If you need to rely on more than unsubstantiated promises, and if you value your business enough to look past the assurances of your suppliers' sales reps, then you should be using a scientific, engineering approach to increasing the reliability of your supplier relationships.
VHG can perform a benchmark evaluation of your suppliers that will enable to forecast, with remarkable accuracy, just how well your suppliers will perform. You will learn the capability of your supplier's organizational performance before you risk your customer relationships on them.
These evaluations are performed using empirically-validated and internationally-recognized best practices. You will receive an accurate picture of not only their current level of capability, but also of the risks involved in entering into a relationship with them. This means you will have visibility into their processes so that you can manage your interfaces accordingly.
Even if you must single source to the only available supplier, you can still prepare and educate yourself to achieve the most positive outcome feasible. By understanding their current capability you can determine how best to manage your own risks as well as plan to manage the risks associated with dealing with them. No surprises!
When you undertake to evaluate a single source or a group of competing suppliers you are:
- giving your people the tools for measuring and monitoring your suppliers' organizational performance. This in turn affords you an objective, quantitative benchmark that clear identifies their organizational and operational strengths, weaknesses, opportunities, and threats
- establishing the conditions under which you can request that they improve their performance and in doing so, you can include these conditions as measurable contract terms of performance
- determine how best to assign your own resources and tracking mechanisms appropriately so you can monitor your supplier's performance and establish (measurable) improvement objectives
- providing yourself with a reliable and repeatable quantitative measurement that helps you set the standards under which your suppliers must perform, enabling you to demonstrate your ability to deliver to your customers.
- establishing an insight into and oversight over your supplier's inner
workings to detect and fix their:
- broken processes - so they can be fixed now
- mistaken assumptions - to ensure accuracy and prevent mistakes
- miscommunicated or outdated requirements - to help you achieve the right objectives
- lack of understanding of policy, process, or strategy - to educate them to deliver to you what you need
- high defect density ratios - to reduce rework, costs, and schedules
- lack of efficiency - to reduce rework and improve productivity
- low productivity rates - as a result of inefficient or broken processes or lack of training or direction
- high maintenance and support costs - as a result of too few peer reviews and development controls
- too many shortcuts - as a result of lack of process definition, discipline, or communication
- costs overruns - to increase your bottom-line profits.
...in short - all of the aspects of processes that are people-driven, and thus prone to error.
The net result is that you've gained intelligence as a buyer and you can help your supplier succeed by doing what they want to do - meet your requirements.
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