21st Century Vendor Management in Industrial Automation

Posted by Steve Beyer on May 24, 2017 11:53:41 AM

Vendor_Partnership.jpgWe are a business that executes hundreds and hundreds of projects every year. These span the spectrum from simple to complex, urgent to critical, and small to large. As a vendor in industrial automation, we participate in these interactions as a supplier to prospective clients wishing to accomplish business goals. There are about as many ways to go about this as there are projects; however, there are certain parameters that yield more likely success more often. Let's look at them.


Set the Tone

From our “supplier” standpoint, the style that a client sets dictates a large part of how the program will go. Whether it's strategic or tactical, a capital or operational project, the client doing the hiring has the opportunity to dictate the terms. That includes how they see the relationship with the vendor they will ultimately choose. Will it be transactional, a “once-and-done,” or might it be a strategic long-term relationship they're looking to establish where future activity and opportunities are expected? Keeping harmony between the different natures of these style components will assure a smoother project and increase the likelihood of a successful outcome.

The definition of that success will come from several pieces. Communications plays a huge part in achieving success. While we have talked here before about project communications, we can go further in this post.

Define Expectations and Objectives

Let's start with the client’s expectations and objectives. Spell them out clearly, define the desired finished state in terms that are measurable and clear. That is, have achievable metrics that are well-defined and clearly documented from the beginning of the process. The best place to start is with the Statement of Work (SOW). Being comprehensive and clear in what is to be achieved and how that is expected to happen create the opportunity for not only an open give intake between the client and the vendors, it also creates the framework for that measurement and analysis of performance. Develop a Request for Proposal, or Request for Quotation (RFP/RFQ) that captures those business objectives as well as the technical description of what is to be done.  Allow the vendor to contribute and leverage their own experiences, expertise, and suggestions; it is not simple but can add tremendously with the right vendors.

Remember the Details

Some projects fall apart here. A SOW may contain a technical description of how pieces of technology are to be fit together, but fail to deliver a context of what success really looks like. Does it deliver cost reduction? Does it improve capacity, or throughput by a fixed percentage calculated in a specific manner? Is yield increased or scrap reduced by a specific amount and the formula for that described clearly? Are there timeframes, deadlines, and milestones that need to be achieved and how do those impact the business objectives?

If as the client you are telling yourself that the SOW is to communicate openly and candidly what your project needs to achieve, how you measure that achievement, what success looks like, and what risk you're willing to tolerate, then be sure that your RFP/RFQ reflects that. Are you bringing your prospective vendors into your confidence, or are you keeping them at arm’s length, perhaps withholding some information? That is done sometimes by clients who are going a transactional route where they are buying technology and see it as a task, as opposed to a mission-critical system and developing a long-term relationship for sustaining and improving over time the results of this project. Align your selection with your objectives. 

There are circumstances where are you will want to have a very tight, unambiguous, and specific list of equipment and services that you can specify down to the detailed level (manufacturer, model number, etc.). That can be a matter of vendors “checking boxes” and competing based on price and availability.

Consider Risk

You may have circumstances where your business opportunity dictates a well-managed risk, high probability of success project where an experienced and knowledgeable vendor partner is required with the requisite experience and expertise necessary to execute; a significant project that dictates they bring something to the equation beyond technology and “box-checking”. If so, be certain that you consider all the factors of quality, cost, schedule, and risk management.

Keep the “Shortlist” Short

Vendors who shortlist only two or three vendors when going through a qualification process then assures both client and bidders will be able to have confidence that they are in a position to be fairly treated as well as deliver to each other's expectations. That's important for the project as well as for future opportunities.

If you as a vendor manage your expectations, your statement of work, your selection process, and your tolerance for risk then you have an excellent chance of having your project delivered on time on budget and meeting your success criteria. Best wishes!

Topics: Alliances, Purchasing, Automation, Business

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The goal of this blog is to be helpful to readers by providing useful information about applications in industrial engineering, design and skilled trades, as well as industry knowledge. We're passionate about manufacturing in the United States. We have a little fun with it too.  

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