Firms need to monitor suppliers

Survey fnds that firms failing to ask for reports

Many companies face risks because they are failing to monitor the performance of their suppliers and service providers, according to the results of two surveys published in September.
A survey of 50 UK CIOs by IT consultancy Deloitte found that three-quarters believe that outsourcing IT functions can drive change, but over two-thirds do not ask for detailed reports about performance from their outsourcing providers.
Experts said companies should put systems in place to detect and monitor weak suppliers and so protect their business processes from possible disruption.
"The ongoing management of [outsourcing projects] is not being done in a robust and professional manner," warned Phillip Everson of Deloitte. "[The research] suggests that the people making [outsourcing] decisions are doing so to get rid of a problem. But you can't [just] outsource the problem as your business will still be affected." Everson said companies outsourcing IT functions should make sure they address any performance problems before handing over responsibility to a third party. They should also demand frequent reports from their service provider, so managers can monitor performance.
Keshab Panda, head of European operations at India-based IT service provider Satyam, said companies that develop a partnership with their outsourcing suppliers enjoy better returns.
"We advise customers to put in place a long-term project roadmap in collaboration with us, so both parties know exactly what is expected," he said. Panda added that firms should also consider appointing a specific outsourcing or offshoring manager to oversee the relationship.
Separately, research by procurement services company Tiva suggests UK firms are taking a similarly blase approach to other supplier relationships. According to its survey of 365 companies, the average UK firm has procurement professionals assigned to just 17 percent of its supplier relationships.
Tiva's chief operating officer, Sandy Duncan, said resource management systems could be deployed to help firms control all of their suppliers rather than merely the top tier. He added that firms that failed to automate the management of their supplier relationships were in danger of "coming a cropper, whether operationally, financially or reputationally" if their suppliers fail to deliver.