Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Metrics For Vendor Management V4

Join at metrics.ning.com

Metrics For Vendor Management V4

  1. 1. A Case Study for Metrics Driven Vendor Management Services (VMS) Danniel Martinez-Iller 05.05.2010
  2. 2. Agenda What is Vendor Management Goals & Benefits Landscape Analysis: Sourcing Systems, Data, Technology, and Process Framework Design Principles VMS Metrics Framework Dashboard Sample Scorecard Results Accomplished Lessons Learned
  3. 3. What is Vendor Management? “Vendor management is the discipline of establishing service, quality, cost, and satisfaction goals and selecting and managing third party companies and their resources—people, proprietary solutions, innovations ,and systems--to consistently meet these goals.” - 360o Vendor Management: "Definition of Vendor Management", page 1, 2007, with modifications in italics by Danniel Martinez-Iller & Joseph Choi.
  4. 4. Goals & Benefits Single Source of Truth (SSOT) 1) Resources 1) Average cost analysis (how much are we paying) 2) Consumption type (what are we buying) 3) Tenure limits (co-employment risks) 2) Vendors 1) Reduction (leverage economies of scale) 2) Core competency identification (who/where are our best vendors) 3) Risk mitigation (reduce or eliminate risks) 3) Spend 1) Where are we spending our budget? 2) How can we get more with less? 3) We need to reduce our budget, and where can we cut? 4) Performance 1) Supplier “hit” rates (How often do they fill) 2) Benchmarking (how can we increase if we don’t have a baseline) 3) Vendor Satisfaction Survey (VSS) (how can we tell if our vendors are doing well)
  5. 5. Landscape Analysis: Sourcing Systems
  6. 6. Landscape Analysis: Data Org Name US India China Etc., etc. Total Org_1/SVP_1 $1,1 $1,2 $1,3 $1,m Total_1 Org_2/SVP_2 $2,1 $2,2 $2,3 $2,m Total_2 Org_3/SVP_3 $3,1 $3,2 $3,3 $3,m Total_3 … … Org_n/SVP_n $n,1 $n,2 $n,3 $n,m Total_n Total: Tot_US Tot_India Tot_China Tot_?? Gr. Total 1. Data can come from different data sources, e.g, ERP, SAP, etc. 2. Data can be generated weekly, monthly, quarterly or annually 3. Data can have many dimensions: By Sr. VP, VP, Director, Vendor, etc.
  7. 7. Landscape Analysis: Technology Here are some technology and/or process providers…
  8. 8. Landscape Analysis: Process
  9. 9. Framework Design Principles
  10. 10. VMS Metrics Framework Relationship Scorecard Operational Scorecard These metrics address: These metrics address: 1. The overall Relationship – Size, 1. Delivery capability Spread, Depth 2. Quality of delivery 2. Growth – Overall growth, Areas of 3. Compliance growth, Spread of Growth 3. Breakdown of the Relationship – By Skill, by Levels, by Contract type, by Location Financial Scorecard Satisfaction Scorecard These metrics address: These metrics address: 1. Partners Financial performance in 1. Client satisfaction with the Partner Industry 2. Partner satisfaction with the Client 2. Partner Financial parameters for the 3. Strengths and Weaknesses of the engagement Partner across multiple dimensions 3. Key Financial parameters driven by Corporate goals – Savings, etc.
  11. 11. Dashboard Consolidated Scorecards Metric Listing Dashboard (Drillable)
  12. 12. Sample Scorecard Metrics Target Current Value Outside Services Spend $10M $12.5M FTE-to-Consultant Ratio 70:30 ~50:50 Offshore Leverage % 85% ~45% Blended Rates for India $15k $20k Partners Consolidation % from US 30%?? 0% vendors to India Partners Qualified Spend % 85% 80% Cost Savings $100k Monthly $125k Average CSAT Score for India 4.50 4.25 Partners Average CSAT Score for US 4.50 4.15 Qualified Vendors Tenure Exposure <= 5%?? 6% Compliance 100% 92% Etc., etc.
  13. 13. Results Accomplished Metrics available anytime and anyplace Creation of “Derived” metrics from “Generic” metrics through configuration (e.g., FTE-to-Consultant Ratios) “Any-to-Any” drilldowns to see “hot spots” Availability of “Leading” as opposed to “Lagging” metrics—No longer as an event SSOT for all to consume—No more duplicated effort!
  14. 14. Lessons Learned Must understand the DIKW hierarchy Management wants wisdom, not data Management wants access to wisdom now Data and system nuances can derail the most sophisticated metrics framework QA, QA and more QA until death Re-org can be a deal breaker!
  15. 15. Questions?

×