Gerry, IT Director/Strategic Sourcing & Procurement, Philadelphia, U.S.
Over half of what we buy is now services. Ephemeral, impossible to inventory, difficult to measure quality and inconsistent. Yet most of our tools and much of our mindset is still focused on the supply and procurement of goods. So what challenges do we face?
1) Defining quality of services, while allowing for experimentation needed to find improvements in the services over time. SLAs are not enough. Over the long haul, we have to have a way to drive the cost down and the quality up, and set those expectations and the partnership behaviours both companies will use to make the relationship work.
2) Pricing for quality of services. Continuing to benchmark service costs without valuing the whole service delivered creates the race to the bottom and an inability to find suppliers of quality service. Tech support anyone? If you don't want to talk to the fellow in India who was trained 15 minutes ago on how to answer the phone, then you'll have to pay a fair price for the quality of service received.
3) Coaching and developing the service provider. The folks doing the service for our company have an insight into how things can be done better, and making sure they have the process and systems improvement tools will make us both better in the long run.
My Response:
Of particular interest from your response was the emphasis on the intagible "tangible" services procurement.
Certainly this has represented a challenge for many organizations in terms of quantifying a vendor attribute that may or may not contribute to a best value outcome.
One such example frommy research was a situation whereby the buying organization wanted to include a stipulation that the vendor's technicians had a certain level of certification.
This led to the following question; is a 20 year veteran without a specific certification less capable of delivering the same level of service as a technician with only 1 or 2 years practical experience and the prerequisite designation?
What are your thoughts?
Gerry's Closing Comment:
Certification is not a guarantee of good service, it is simply an indication of consistent service. The certified technician has been trained on a set of procedures that will yield a predictable result in a given amount of time. The experienced technician may have more insight and will probably be able to solve more problems faster. However, when that experienced technician is unavailable, is promoted, etc. the level of service can vary dramatically. Most studies and most disciplines (Six Sigma, ITIL) place the emphasis on getting consistency right first, then working on improvements to speed or other attributes. Therefore, seeking certification is probably the best long term guarantor of service quality. Best of all worlds would be to have the experienced technician participate in the first few months of the contract for process improvement events. This would move the quality improvements along faster as well as providing a challenge for the veteran technician.
What are the 3 biggest challenges faced by supply chain/purchasing professionals today? (Survey Result 17) - To learn more about this author, visit Jon Hansen's Website.
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