Following concerns raised at a Corporate IT Forum, supplier management workshop about how to balance the inevitable impact of budget cuts on supplier relationship, a number of delegate attended a WebEx on 23rd June 2009
The key points that emerged were:
The key points that emerged were:- Contract costs and/or extended payment terms can be traded for lengthening the contract. But one will be negotiating from a position of weakness.
- Reducing a supplier’s margin can lead to a reduction in the quality or experience of staff dedicated to or working on the contract.
- Effect can be seen across any area of the contract
- Make sure internal processes are good to help mitigate this effect
- Make sure internal staff are good
- Supplier’s service management and/or account management staff can add value when the job is done well
- Keep a regular and frequent watch on suppliers for whispers or rumours of problems. Draft a plan if there are even slight concerns, and start discussions as appropriate if the concerns become serious.
- Offshore suppliers may be hit even harder by the global downturn
- Exchange rate may penalise offshore supplier
- Inflation is relatively quite high – e.g. India approx 10%
- There is a desire to move from CapEx to OpEx, but suppliers are not cash rich, so the price they are willing to pay for assets (if at all) is not good.
- Where currency exchange rates (and fluctuations therein) cause difficulties, consider moving offshore operations to other countries. Mexico is being considered by some.
- Multinational customers can pay international suppliers in the suppliers’ currency – e.g. pay Cisco from the dollar account. This may help insulate from currency fluctuations.
- It seems to be (very) difficult to get accurate current data on contractor rates.
- Delegates felt it was worth exploring the Forum facilitating, if not implementing, a data sharing initiative in this area.
- Vocalink have a respected pay index, now quoted by several publications – e.g. The Guardian; Evening Standard, Channel 4 News. Perhaps build on this?
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