Around 30% of businesses report strong dissatisfaction with contractor performance. Unsatisfactory relationships could be allowed to continue because of the difficulty in terminating a legal agreement or the effort required to retender. Getting it right from the start is therefore of critical importance, so what can you do?
A clear knowledge of requirements is crucial to evaluating contractor performance. Perhaps your operation has grown beyond the scope of the contract or you need to update service levels to keep pace with customer expectations. A comprehensive review to define your current and projected needs is the first step to better results.
Often users negotiate hard for the best price but neglect the implications of the charging structure once the operation goes live. Good mechanisms are fair to both parties and encourage the contractor to reduce costs and improve productivity to the benefit of both parties. Understanding the options will enable you to weather change and drive competitive behaviour.
Thorough investigation of the market can reveal alternative contractors with resources and skills better suited to your needs. Is your contractor committed to the services you require in the long term, and do they have the financial resources to be a leader in their chosen sector? If not, it may be time to look elsewhere.
If you need to retender the process should be well structured. All potential contractors should be provided with the same information and sufficient time to respond to a common brief. They should also be encouraged to provide innovative and creative solutions.
In addition to standard legal obligations, the contractual agreement should clearly define each party’s operational responsibilities, performance standards and reporting requirements. A successful relationship should not require constant reference to the legal agreement but will depend on it as a solid foundation.
Davies & Robson helps to outsource both simple and complex logistics operations to third parties across a range of industries. Each year we manage the outsourcing of contracts to a value in excess of £100m with particular emphasis on:
We have provided clients with outsourcing solutions for over 30 years. Practical consultancy experience enables us to understand the optimal ways to source and manage third-party logistics for your business. That knowledge allows us to support you at each stage of the review and outsourcing process.
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