Hillary - Thanks for the feedback. I do think there's enough of us that would benefit from benchmarking with one another. That would be fantastic if you the community can coordinate. I will email them. For the call, I think there may need to be some structure to achieve what we need to. Happy to help in that endeavor, if needed. Thanks so much.
Original Message:
Sent: 10-25-2023 12:30 PM
From: Hilary Jewhurst
Subject: Vendor Performance Management and KPI's
First, I have to say that this is a great discussion thread. Now, to address Stephen's original question, when it comes to performance management metrics, it's essential to realize that every vendor relationship is meant to deliver a specific benefit. Those benefits are achieved by either helping the organization solve a problem (examples include providing a specific product or service that cannot be effectively or efficiently produced internally, improving infrastructure, hardening cyber security, or augmenting staff) or by realizing an opportunity (examples include expanding market share, improving NPS, increasing revenue.) Identifying the intended benefit of vendor engagement is the first step in developing appropriate performance metrics.
Once the benefit is clearly identified, I have always tried to break the metrics into three distinct tranches. The first of which is performance, the second is risk management, and the third is total value. Let me dive into each area.
Performance: The metrics should be based on the expectations for delivery of the product or service and should include any contractual SLAs. They should capture dimensions such as quality, delivery, Support ticket resolution time, Product or service defect rate, Order accuracy, lead time, customer service, NPS score, etc. Of course, these metrics should be relevant to the product and service.
Risk Management: These metrics measure the vendor's compliance, risk management practices, and identification and management of risks and issues. Metrics could include the number of issues identified, timely submission of documentation and vendor risk questionnaires, strength of BCP/ DR plan, etc. Risk management metrics are extremely important when dealing with Critical or High- Risk vendors.
Total Value: These metrics can help you gauge the value of the relationship. A word of caution here, these metrics can only be useful if you have access to data to support them. A few examples might be competitiveness, pricing, stakeholder satisfaction, scalability, ROI, and whether the vendor is helping you solve that problem effectively or realize that opportunity. For vendors that are 'strategic partners, ' you also might measure innovation, improvement, and operational efficiencies. What I do like about these types of metrics is that they can also help your organization evaluate the total solution and if there is anything that needs to be done on your side to improve total value. It's not usual for a vendor to deliver exactly as expected, but it still isn't enough, indicating that internal recalibration or improvement is necessary. Keep in mind that total value metrics aren't going to be super useful for some vendors, so you need to be thoughtful about when to implement them.
So those are a few of my thoughts. But the discussion doesn't need to end here. If members are interested in a benchmarking call, please go ahead and message the Community Manager at community@thirdpartythinktank.com, and we'll tally the numbers of those interested to see if we can set something up.
Original Message:
Sent: 05-22-2023 03:49 PM
From: Stephen Meyer
Subject: Vendor Performance Management and KPI's
Vendor performance monitoring feels like an overwhelming but important piece of a successful Third Party Vendor Management program. As we look to mature our third party risk program, I would like to learn of some of the best practices other organizations have implemented related to vendor performance monitoring. As we think about Key Performance Indicators, what are others utilizing to measure their vendor's performance (SLAs, Quality Assurance, etc.)? Does anyone have a survey of questions they like to utilize with their internal business owners/product users? If it is a vendor that interacts with your end customer, do you complete any surveys surrounding customer experience? How as an organization can we capture the ROI with an established vendor relationship?