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Outsourcing: Effective Vendor Management Strategies
OTHER PARTS OF THIS ARTICLEPt. 1: This PagePt. 2: Outsourcing: How To Select the 'Right' VendorPt. 3: Outsourcing: KPIs Determine Success with Vendors
Managing contracted maintenance activities effectively and efficiently has always been a struggle for maintenance and engineering managers.
The number one reason for outsourcing maintenance is to cut costs, according to a recent survey of managers. But let’s be crystal clear here: Outsourcing maintenance does not save money.
What managers are trying to achieve with contracting maintenance is evaluating service vendors to strike a balance between costs and service that optimizes operations. When successful, managers can reduce maintenance expenses by employing a contractor with more expertise and skills than in-house resources can provide.
How can managers streamline the vendor evaluation process in order to reap returns from the decision to outsource? One important early step is to establish a baseline of true maintenance costs. Managers will not succeed unless they understand their departments’ true maintenance costs.
By focusing on these six specific areas, managers can improve their chances of success.
Scope of services
In order to successfully identify and clearly define the requirements and service specifications, objectives, expectations, and constraints of the service to be provided, managers can focus on the following factors related to the scope of service:
Inputs. Appropriate inputs are crucial to the scoping process. They include: services to include and exclude; departmental maintenance policies; strategic maintenance plan; and condition assessment and other processes that require careful consideration so contractors can provide the full scope of services required
Efficiency. The evaluation process must ensure coordination with other maintenance tasks, as well as other departments and regions.
Specifications. This outcome of the scoping stage contributes to the service arrangement used for procurement in order to perform condition assessments and other inspections or data collection that might be required.
Outcomes. One result of this process is a service specification that is delivery focused, including performance requirements, that enables a service provider to respond with an effective, efficient value proposition.
Support. Contractors need to understand the necessary hours of support and emergency service the department will require.
Future. The process needs to identify long-term maintenance needs.
The service specification might be part of a service level agreement (SLA) or other suitable contract that complies with an organization’s policies. Managers should establish appropriate arrangements for service providers to access asset data and associated information required to enable the service provider to respond. The level of access granted also must comply with the organization’s policies.