Managing your vendors and suppliers doesn't stop after the outsourcing contract is signed. You must continually measure and monitor your vendor's performance in order to ensure continued success. Additionally, this must be spelled out in the contract so that the vendor understands your expectations and you have a course of action if the vendors performance falls below your expectations. Without this understanding, the success of your outsourcing project will be a shot-in-the-dark.
Vendor Management and Quality Assurance
The initial justification for an outsourcing project is usually based upon cost savings. Unfortunately, most companies do not know if they are saving a little or a lot or anything at all. Before beginning any outsourcing project, you must know what your current costs are for the product or service being outsourced to a vendor. First, this information will give you additional leverage during the negotiation process. Secondly, the product or service must be delivered at a level of quality that is defined by your business, communicated to your vendor and used to measure their performance. These two aspects will give you the tools you need to manage your vendor.
Your Benefits
Any outsourcing arrangement must be viewed as an extension of your company into the vendor's organization. Any quality control standards or methodologies must be communicated and shared with your outsourcing vendor so that the product or service will be delivered at a level of quality that is consistent with your internal organization. This will prevent any negative impact to your current customer base.
The Vendor Benefits
"If you can't measure it, you can't manage it" was the mantra of a previous employer of mine. Giving the vendor the tools to define and measure quality will aid the vendor's quest to provide a consistent quality product or service to you. Additionally, the vendor can use these tools for a continuous improvement program that will help them manage quality while controlling their costs.