Vendor Management Best Practices for Utility Companies

Maintain healthy relationship management practices

Once an outsourcer is identified and a contract is established, the work is ready to begin… right? “Yes, and…” is the correct answer here! There are a few other best practices to adopt in order to be efficient and effective in utilizing external contract labor.

1. Define when and under what circumstances contractors will be utilized.

Will your organization outsource all the work or do a partial outsourcing for specific tasks/milestones? Ok, technically, this should have been done before an outsourcer is even identified, but it’s a great tactic worth mentioning.

2. Ensure an onboarding process for contractors is identified and adopted within the organization to save time and delays on getting to the actual work.

• Are there security access levels needed for key systems or physical spaces?
• Who will be the key point of contact for the contractors? Is it project-specific or group-specific?
• What existing documentation needs to be shared with the contractors and how?
• How will introductions be made to kick things off?

3. Build efficient and effective processes to oversee contractors’ work within the organizational structure.

• Many organizations prefer to hand-off this task to a Project Manager or a robust PMO, while others prefer to keep it at the functional level. There are pros and cons to both approaches, but there is a commonality: stay consistent and do not spend too many internal resources on overseeing contracted labor.
• Ask yourself the tough questions:
  • Who or what group within my organization is best suited to oversee vendors with respect to bandwidth and skillset?
  • What skills are required to oversee vendors?
  • Do we have the available resource(s) and bandwidth, or do we need to re-shuffle roles and responsibilities first?
  • How will we set expectations for appropriate vendor management, and how will we measure our overseers?

4. Ensure you’re using technologies appropriately.

Managing work output, KPIs of projects, internal and external workforce, and overall budget tracking can be handled and automated by available technologies. Taking advantage of setting up appropriate tools in place will yield benefits when it comes to keeping on top of work demand and outsourcers.

5. Track lessons learned and create cross-communication of issues and wins along the way.

Review these on a regular basis with your contracted partner(s).

6. Allow for the contractors to own their work and hold them accountable when they don’t.

Manage your own approach

Overseeing contract labor sometimes is necessary and critical as well. Most likely, your organization or functional area does not have the internal staff or resources to handle too much oversight; therefore, there are a handful of do’s to keep in mind:

1. Do avoid handholding or micromanaging.

Define and enforce a healthy rule for appropriate level of oversight; encourage those who have the responsibility to oversee contract labor to avoid taking on the tasks of contractors and being overly involved in the day-to-day output of work. Instead, encourage them to set standards in place and monitor.

2. Do take time and consideration in assigning an overseer.

Identify individuals who have an ability to lead and manage others and grow those skillsets to set them up for success. Be clear about the job expectations of overseeing contracted labor, and identify how it might tie in other responsibilities they might have unrelated to overseeing so they can be clear of their job role.

3. Do enforce a normality with rejecting work output when it does not meet quality and/or safety standards set in place.

It’s common to build an affinity with a specific contractor, but always remember that not rejecting work will only persist in poor quality of output and ultimately can build resentment instead of healthy trust and relationships.

4. For new contractor relationships – do allow for a reasonable learning curve until the final output is in alignment with your standards.

Review work more frequently in the beginning prior to the final output being turned in. This helps with not only validating quality along the way, but also allowing for the vendor to learn your standards and “ways of doing business.” Once the learning curve has passed, you can shorten the level of oversight and switch to a more efficient monitoring model. This is ideal for organizations who utilize contract labor for long periods of time over multiple projects.

Sendero works with many clients on defining their current processes, procedures, and technologies in place to identify key pain points and opportunities for best utilization of contract labor. This also includes assessment of critical processes, supporting technologies, and organizational effectiveness.

Building lasting vendor relationships will yield great results all around

When much is at stake with critical timelines, communication channels can break down easily. Building and nurturing trust with your contractors and vendors will allow for both parties to deliver at higher degrees of quality – efficiently and effectively – to ultimately meet the work demands.

• Seek two-way continuous improvement practices from your contractors.
• Develop a routine where both parties can come to the table and discuss what is going well and what can be improved to better serve the outcome.
• Stay honest and humble in these situations so healthy and constructive communication can continue.
• Maintain and enforce effective processes, technologies, and people in place to ensure outsourcing is as effective as intended.

If you depend on vendors to meet work demands and struggle with achieving the desired results, it may be a sign there are hidden opportunities within your current vendor management protocol. Reach out to Sendero to determine how we can assist you in evaluating your critical processes, people, and technologies to help you achieve your strategic vision utilizing contract labor.

By Luba Popov