If you are searching on behalf of a small firm (say…your grandmother) then choosing a service vendor is pretty easy. Ask Bob down the street which plumber he uses and check Angie's List. Shake hands and then if something goes wrong, a few bucks and a new contractor can get things straight.
Now I don't know your grandmother specifically - for all I know she is a serious player in global grommet conversion and decommissioning. But assuming that a) she isn't and b) you represent a large firm, choosing a vendor is colossally more complex. Thinking about the "to be provided" service alone is difficult but you have to layer on questions of liability, responsiveness, trustworthiness, performance history, price stability, geographic coverage, business risk and the search costs you will have to take on (again) if something goes wrong and you have to select a new vendor before the contract is up.
For all of these reasons it is critical to think about the procurement process from before a request is initiated all the way through to vendor management. To this end I've put together 15 value-centered best practices, complete with quotes that hit the mark. Of course there are always unique considerations but these are elements common to most situations.
Before Issuing a Request
"The measure of intelligence is the ability to change." -Albert Einstein
1. Decide in advance how you will score respondents but retain sufficient flexibility. You will learn new things on every project and some lessons are important enough to require action. This is not possible if you have painted yourself into a corner.
"Why not go out on a limb? That's where the fruit is." –Will Rogers
2. Understand that your potential partners are businesses also. If they do not understand the risk they are taking by entering into a contract with you then they will set higher prices. Provide the most clearly written request document possible. State assumptions including who-what-when-where-how constraints and likely project parameters, even if they must be qualified.
"A creative man is motivated by the desire to achieve, not by the desire to beat others." –Ayn Rand
3. Encourage creative responses. Ask questions like "What provisions could we include, remove or alter to reduce risk, increase quality and/or reduce cost?" This may provide insight into a vendor's strengths and weaknesses or help identify unanticipated synergies.
"If you tell the truth, you don't have to remember anything." –Mark Twain
4. Ask for references. Work with your potential partners to collect feedback in any way that their clients can provide it. Carefully consider whether feedback is required or desired and how positive, zero or negative feedback plugs into your evaluation process.
"A ship is safe in a harbor, but that's not what ships are for." –William Shedd
5. Choose your counsel carefully. Lawyers can kill deals, but they can also mitigate a lot of risk and add a lot of value. Finding a lawyer (inside or outside) that can balance risk and value is critical when contract verbiage is flexible and a true negotiation.
"Marriage is a fine institution, but I'm not ready for an institution." -Mae West
6. Decide in advance whether you must find a vendor at all cost or whether no selection is a viable option if minimum criteria are not met. Outsource and source change decisions are often made from the top down, but it must be a responsibility of the sourcing project to communicate how the risk spectrum is affected by a sourcing outcome.
"Adventure is just bad planning." –Roald Amundsen
7. Explicitly address price stability. Regardless of the term of the award it is beneficial to understand limits on price increases. Make sure that your firm is protected from unreasonable re-pricing if the contract allows for substitutions and changes.
"Experience is merely the name men gave to their mistakes." –Oscar Wilde
8. Ask for ‘all in' costs whenever possible and evaluate proposals based on both ‘all in' costs adjusted for risk. A 50/50 chance of cheap/expensive is usually worse than a 100% chance of reasonable.
After Issuing a Request
"There is no greater evil than men's failure to consult and to consider." -Sophocles
9. Allow a reasonable amount of time for questions and responses, and provide written responses to all vendors. An unreasonable timeline is likely to lead to bad decisions and high prices.
"What we find changes who we become." –Peter Morville
10. Check references and do your own research. What are others saying about your responding vendors? There are a myriad of formal and informal sources of information including professional research firms (Forrester, Gartner), business scoring (Dunn & Bradstreet), the Better Business Bureau, discussion board and news searches etc.
"Better a diamond with a flaw than a pebble without." -Confucius
11. A good response might mean a good proposal writer but not a strong potential partner. The converse is also true – a good potential partner might not field the best written proposal. Focus on value in your decision making process – not nits.
"A great man is always willing to be little." –Ralph Waldo Emerson
12. Evaluate information regarding the likely size of your account relative to your potential partners' other clients – both in a total and a regional context. A large provider seeking to grow in your market might give you a lot of attention, even if you are a comparatively small client for them. On the other hand you might be ignored or get low quality resources if you are too small. This consideration is often a critical factor in the evaluation process.
"Power does not corrupt. Fear corrupts... perhaps the fear of a loss of power." –John Steinbeck
13. Consider implicit and explicit conflicts of interest at all levels and when all decisions are made. This can range from political conflicts of interest within your own organization (who is on the decision/evaluation committee?) to conflicts with existing or future clients of your potential service partner.
"That which yields is not always weak." - Jacqueline Carey
14. Look for flexibility. Are partners willing to share risk based on delivery timelines? Are they willing to allow you to qualify resources, or to guarantee resource stability? Can they provide historical delivery metrics that indicate a value-centric philosophy?
"The purpose of writing is to inflate weak ideas, obscure poor reasoning and inhibit clarity." –Bill Watterson
15. Ignore buzzwords and focus on the meaning of the message. This goes for your request as well as evaluating the responses that your receive.
Happy hunting and say ‘hi' to your grandma for me!