Bit of background first...
We have been "score carding" our vendors for sometime now but in a rather manual fashion. Yes you guessed it, we used some funky looking Excel forms of course! So last year (2012) I decided it was about time we brought some automation and standard way to achieve the management of our vendors and make the process available across the entire business.
It's nothing new!
Our Vendor Scorecard is based on the balanced scorecard, which is a strategy performance management tool and widely adopted performance management framework - a semi-standard structured report, supported by design methods and automation tools, that can be used by managers to keep track of the execution of activities by others and to monitor the consequences arising from these actions.
A performance metric used strategically to identify and improve the relationship of two parties, mainly of that between a customer and vendor. The vendor scorecard attempts to measure and provide feedback to both parties in order to assist in improving and developing stronger partnerships. The vendor scorecard is in place as a mechanism to aid the continual improvement of the relationship from both a financial and operational perspective.
Scorecards are about the Business Processes, not Technology
This post is more about the "what" and "why" we do scorecards, if you want to know "how" there are plenty of articles on the community that will help you configure these forms.
What are our key goals and objectives
- To gain a clear understanding of the relationship.
- To help identify areas for improvement.
- To ensure service exceeds our expectations.
- To contribute towards strategic business assessment.
- To assist in availability and planning management.
- To build customer satisfaction and loyalty.
"It is our goal to turn our vendors into partners through proactive account management"
Scorecard performance measures the following areas - Internal process - Focuses on the activities and key processes that happen within the organisation.
- Customer Service - To satisfy customers and provide the levels of service to improve quality.
- Financial - The strategy that contributes to bottom-line improvements.
- Learning and growth - Focuses on the intangible assets of an organisation, mainly on the internal skills and capabilities that are required to support the value-adding internal processes.
- Overall - The overarching measure of performance and satisfaction.
Our colourful score/rating table
All areas are measured against this. (If fact we use this in many other situations outside of vendor management)
Everyone can have their say...
Since using the ServiceNow platform to make Vendor Scorecards more accessible we were able to include many more interested parties that could not have possibly been involved when it was a manual process. Here are the types of roles that input now:
1. Users of the service
2. Service owner
3. Support team of the service
4. Internal account manager
5. Relationship manager
6. Procurement manager
7. Accounts/finance
8. Senior Management
Use the scorecard to assist in review meetings
The scorecards are reviewed on regular basis, normally in line with the review cycle of the given vendor. This helps us to quickly to identify and improve any problem areas that may have gone unnoticed in the past. Equally (and hopefully) the scorecards are used to ensure both parties recognise and build on areas of success. Since all stakeholders now have their say this means come review time its very easy to pull off a report showing current and past performance, which we have found significantly improves the relationship and becomes helpful in the decision making process at renewal time.
Sample vendor report
What do we include in each scorecard
The new VSC (vendor scorecard) application captures: - Vendor/3rd party [reference to core_company + u_vendor=true]
- Review cycle [u_review_cycle from the vendor record]
- Period, the month being reviewed [choice field]
- Reviewer, person completing the scorecard [assignment_group, assigned_to]
- Short description, this is auto calculated
Vendor scorecard form
Definitions used in our Vendor Scorecards
Internal
Process - Proof that processes/methodologies are followed to reduce risk.
Staff - Provide trained and professional staff which relate to our products and services.
Resource availability - Able to deliver the right levels of support with the available team.
Release programme - New products and processes are well communicated and understood.
Customer
Meetings - Frequency of service reviews, discussions, minutes and notes.
Commitments - Meet or exceed delivery commitments, both in terms of time and quality.
Expectations - Products & Services meet or exceed expectations.
"Best in class" - Delivering "Best in class" support, products and services.
Financial
Billing - Invoices meets minimum requirements and are on time and accurate.
Proposals - Proposals include everything requested and arrived on or before expectation.
Value - Quality and cost of products and services are seen to be well balanced.
Proactive savings - Forthcoming efforts are made to increase quality and drive out costs.
Learning and Growth
Improvements - Provide proactive ways to improve productivity for both parties.
Lessons learnt - Introduced corrective improvements to address past issues or incidents.
Actions points - Action Points completed as documented.
Understands us - Understand our businesses, tactical and strategic goals.
Overall
Relationship - Drive up satisfaction through active relationship management.
Account Manager - Ensure the Account Manager is polite, punctual and provides a good fit.
Overall - Overall relationship with vendor meets or exceeds expectations.
Renew - We would renew the contract or recommend this vendor to other peers.
Feedback
This allows for descriptive text to be added to each scorecard.
Sample scorecard section
Anyway there is a little insight into one of the many ways you could use your ServiceNow platform to help manage your vendor relationships.
Until next time...
Paul Hardy
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