Joe CampaSenior Manager, Strategic Excellence Office| Ontario Power GenerationOshawa, Ontario, Canada
How have you stated your strategy for managing external vendor risk in your risk management plan? Saving Changes...
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AKSHAY JAINPlanning Group Leader| YOKOGAWA, BahrainGwalior, Mp, India
External vendor may be a big risk on your project. To manage risk related to external vendor continuous communication and feedback on progress is required. To properly monitor an external vendor a proper schedule with stated milestones must be developed and depending on needs of project weekly or monthly reports must be taken. You can also organize telephonic meetings or video conferencing to know status of work and track progress. For longer & important project periodic visits and visual inspection can also be done to ensure quality of works and if any issue at vendors premises. Again depend upon importance of work offloaded to vendor, a watch can be kept on country specific or industry specific events at vendor’s works. Now days we can also ask periodically to submit photos, videos and any other relevant proof of progress. Risk related to external vendors also can be managed by contractual terms. Like payment term, liquidated damages and provision of penalties on nonperformance. Saving Changes...
Sergio Luis ConteHelping to create solutions for everyone| Worldwide based OrganizationsBuenos Aires, Argentina
The first step is the most important. And it is before your plan starts. The way your company deal with vendors is a must (win-win, win-lost, etc, etc). This will guide all your actions regarding working with your vendors. Saving Changes...
Bruce Gay Principal Consultant| Astrevo LabsPittsburgh, Pa, United States
It is good practice to include your strategy for managing external vendor risk in your risk management plan. I second Akshay's comment - it is key that you maintain close communication on progress and issues/risks with your vendor.
If the organization is large enough to have the resources, another aspect of managing vendor risk is having mitigation plans and/or putting risk buffers in place (additional time/budget) should things go awry. As an example, I had a manufacturer in our supply chain fail certification testing. Luckily we had a second supplier under contractor that we shifted the work to and only suffered minor schedule changes to the overall program. Saving Changes...
Some of the points you can add in your plan could be
-Checks to be done before selecting the vendor for a project(like vendor credential, financial stability, size, experience of resources etc)
-Non disclosure Agreement
-Need to have couple of vendor folks in Onsite location
-Proper governance structure displayed by the vendor
-3 month notice period in case of vendor wants to move out
-Penalty clauses which vendor has to pay for the losses
-In case of critical projects, few core folks from your company can work with vendor team, so that your folks will also have the knowledge of the system
-Instead of giving everything to a single vendor, see whether it can be spread across 2 to 3 vendors Saving Changes...
First ask for their risk management plan.
Get their regular update on risk status for your delivery and the updated schedule.
Get people to their site to review (QAQC) you stuff at their plan.
Get your people their before they can ship to you for a final inspection
Get all that in the contact
All other comments are also to be consider
Sergio note on how was the contract negotiated will influence the execution. Saving Changes...
Stanley OranikaDirector Finance & Strategy| Virtus DeusF.C.T, Abuja, Nigeria
Vendor Risk Management is the process of ensuring that the use of service providers and IT suppliers does not create an unacceptable potential for business disruption or a negative impact on business performance. VRM technology supports enterprises that must assess, monitor and manage their risk exposure from third-party suppliers (TPSs) that provide IT products and services, or that have access to enterprise information. Basically, the use of software technologies and frameworks is a good way to go when managing vendor risk in a large organization since this will reduce the margin of human error and oversight. Saving Changes...
