Multi-supplier service is all the rage, together with its linking agent Service Integration and Management (SIAM). Wonderful in theory. How does one practically get multiple parties to collaborate towards a common end?
It was recognised early in the development of multi-supplier models that there needed to be a unifying agent. A great deal of time and effort went into the development of new operating models, associated structures and contractual mechanisms. Some of the measures proposed have been found to be inadequate. This is not to say that the efforts have been wrong, just that the task is enormous. The implication is that any CIO staking a career on its delivery had best tread with caution be sceptical.
“End-to-end” in itself can have several perspectives, commonly including customer journey, ITIL process and service lifecycle. Successful performance requires coherence across all.
Outcomes Sought
An article such as this can look only generically. Your organisation will have its own drivers and priorities. The most commonly encountered drivers that require immediate action are:
- the expiry of current sourcing arrangements; and
- a financial crisis requiring a significant change in the way things are done.
Commonly desired business outcomes of service model change include:
- Move faster, capture benefit sooner.
- Achieve more for a given level of resource, make better choices.
- Optimise risk.
You need to progress beyond such high-level objectives, expanding them to make them measurable. Good high-level outcomes are likely include:
- Reduced friction and management cost for coordination efforts, including management time
- Faster implementation of change and higher success rates
- Productive improvement across the supply chain
Absent effective collaboration, symptoms include:
- Multiple and protracted arguments concerning who is responsible for implementing aspects of a decision and who is to pay what.
- Slow change and decision-making arising from a lack of clarity of impact.
- Frequent service failures. The reasons are not clear and the steps to stem them are unknown.
- Information does not flow effectively between parties; it is slow and insufficient.
There is no one simple action that can be taken to fix this. Many coordinated measures are need. This is hardly surprising as there are many parties, each with many aspects to direct with approaches developed over time and divergent interests. The elements are so inter-dependent that it is rightly known as a “complex” problem.
Levers Available
Discussion often centres on contract and structure. Research by McKinsey that led to the production of the 7S framework pointed to wider considerations also being necessary. The 7S model and levers below are based on the theory that for an organisation to perform well, the elements need to be aligned and mutually reinforcing. So, you can use the model to identify what to realign. Remediation should to improve performance, or maintain alignment (and performance) during other types of change:
Contract, Commercial Management
The contractual terms have to be consistent with the agreement that the parties wish to implement. Initial experiments focused on strong “collaboration agreements” with obligations and sanctions applied to each supplier based on overall performance. Suppliers complained they suffered from the failings of others, requiring progressive weakening of controls. They are now generally as robust as a wet paper bag. Recent examples seen have used “principles” for collaboration and joint working together with individual suppliers’ obligations and standards for interchange. Think of the contract as up to 20% of what you need to address: big, vital, but not the whole story. The time taken to complete major contract change can be months, so these are not at all flexible.
Incentives
Contracts frequently have aspects that address incentives, be it reward or censure. These can be useful and are important to get right. Use high-stakes incentives cautiously, they can have perverse consequences. Creative incentives can include elements such as speaking on behalf of a supplier. This can be immensely valuable for the supplier when the message is positive, influencing their ability to win other business.
Charm, Cajole (and Other Behaviours)
It is cheap to deploy, sensitive to situation and infinitely flexible. Its application takes skill. Its success relies upon the making of promises to satisfy the real needs and desires of the other. You have to listen hard enough to discern what they are. Skilled actors can persuade directly and creatively. I can quietly let your boss know that attention lapsed to gain your concentration next time. People are remarkably sensitive to behaviours, particularly where there is inconsistency between what is said and what is done. The example set by those in a position of influence (consciously or otherwise) is most important. They can praise and nudge to obtain the required state – or ignore it and face the consequences.
Issue Resolution, Drive
The team has to work to drive implementation and sustain performance through continual improvement. Part of the coordination role is to pick up on issues and drive them to resolution. This requires those in position to look end-to-end to anticipate and overcome obstacles. Those who perform it with talent and integrity earn high levels of trust from all. It is the embodiment of working in the overall interest of the customer. If issues are important, known and remain un-resolved, they will drag down performance of the system and demotivate performance.
Process, Procedure, Policy, Standard, OLA
Dull but vital. These formal mechanisms are the life-blood of predictable daily operations. The key role to get right is the Process Owner who looks end-to-end at the process’s effectiveness and brings the parties together to drive improvement (see ‘Issue Resolution’ above). OLAs (operating level agreements) are useful to support the low-level interactions that occur many thousands of times. Operational people get these as a great boon to mutual support and cooperation. Commercial types will normally resist the imposition of additional obligations. Standards (including architecture, security) are vital for coordination. Keep these clean and recognise that when you change them, there may well be a cost. These are only of value if it is ensured that people work to them.
Tooling
Almost invariably a source of pain. Customers are rarely familiar with the finer points of tooling. The surprise of cost, time and difficulty involved in getting them to work effectively can be unpleasant. Neglect this at your peril! Customers realise that there are some coordinating assets over which they simply have to retain control, but they can still hire an expert to help them deliver.
Organisation / Structure
It is easy to depict the arrangement and relationship between components of the overall structure on a slide. This is normally shows relative roles and responsibilities. It is useful to get this right. Most overstate its significance in sustaining success. Of greater importance is the capability of the organisations and their interactions to realise the requirements imposed upon them by the chosen model. It is in this area that problems occur. Structure is easy to model. Organisation requires work and consistent application to become useful.
Measurement, Management, Reporting
Management plans, builds, runs and monitors activities in alignment with the direction set by the governance body to achieve the enterprise objectives. This activity is typically structured in accordance with the governance levels it supports. The trick is to ensure that the right questions are asked (see here and here, so that the measurements reported provide the insight and guidance required by governance to act intelligently. This requires a degree of skill and intelligence in key roles.
Strategy, Goals
Strategy is the plan or approach by which goals are achieved. Where articulated, clear and shared it is an essential means of leadership. It supports intelligent resource allocation and holding people to account for its achievement. Strategy is stable, tactics are situational and change over time. Strategy is an element of planning. This then has to be executed in action. A plan, however elegant, that cannot be realised effectively, is a bad one.
Vision, Values
These are vital elements of leadership. They have a strong influence on behaviour. They are intangible and sit above transactions. The way that those transactions are performed can be consistent or inconsistent with the vision or values. As such, it is worthwhile working them out and stating them in the contract and elsewhere. Leaders should make frequent reference to them and guide behaviour accordingly. They have a role in the selection of suppliers; those who have incompatible values or a vision of domination have no place in multi-supplier operations. Hire one, and you will have grief for years.
Skills, Staff
Once a contract has been defined, there is a challenging on-going task to hold parties to account for performance of the obligations. Many struggle with this. It requires the customer to have managers at least as talented and energetic as those of the suppliers. Most common areas of challenge are issue resolvers, commercial and financial managers.Integration is all about the coherent marshalling of many components towards a shared end. This cannot be done by working on elements in isolation. The capabilities required are frequently under-estimated, undermining the success of the venture. This does not make the multi-supplier model a bad one, just unsuitable for those who will not face up to the dependencies or have the skills to make it work. The levers are principally soft and behavioural. They are however immensely powerful and difficult to wield well.
I came to see in my time at IBM that culture isn’t just one aspect of the game: it is the game.
Lou Gerstner
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This article was first published in Outsource Magazine and is published with permission.
