How To Build Long-Term Contracting Success – Is your contracting project delivering as expected? — Not every project does.
In fact, according to a Dun & Bradstreet report, 25% of the companies surveyed say their contracted projects don’t deliver as expected. This is a sobering statistic. But you shouldn’t be surprised. If you’ve managed projects before, you know they’re challenging. That’s because they tend to be both tenuous and complex.
Among the keys to getting your vendors/partners to deliver is developing a solid relationship with your service provider. In fact, this may be the most critical factor in long-term contracting success.
This takes a long-term focus to achieve. It also takes things like senior management buy-in, good management skills, and joint-problem solving.
But it’s worth taking the time to do it. It can help cut costs, enhance customer service, and increase customer satisfaction.
These things in turn can help boost customer retention and corporate profits.
A Great Example of Contracting Success
One example of a company that’s gotten outsourcing to deliver is Cummins Inc, a top manufacturer of diesel engines. Headquartered in Indiana, the company has customers in over 190 countries.
Cummins has outsourced some of its manufacturing for years. So it wasn’t surprising when it extended this practice to IT.
This effort ran into a couple of “glitches” early on. But after standardizing processes across the enterprise, Cummins overcame these glitches.
A more critical part of the solution was developing a solid, long-term relationship with its service provider. Tenuous at first, this relationship got stronger over the years.
More than 10 years later, this same service provider continues to help Cummins cut costs and boost FCR.
More importantly, it continues to help Cummins achieve high customer satisfaction ratings—and that’s a key to keeping it atop its hotly-contested industry.
Three Key Building Blocks To Contracting Success
You have to return to the beginning of the relationship, however, to see the key building blocks that have kept this relationship strong over the years. The three key things are:
– Senior buy-in: Right from the beginning, senior executives at both companies publicly backed the relationship within their respective organizations. These executives all touted the effort as a strategic partnership.
This view trickled down to employees. This effort paid off—especially when Cummins instituted a central help desk initiative. This initiative boosted customer satisfaction from 75% to 91% in 18 months.
– Good management: Another key to creating a solid contracting relationship with its provider is the way Cummins managed the buyer-provider relationship.
Early on Cummins’ people weren’t sure how to manage either the provider relationship or the provider’s employees. But as Cummins’ people gained more experience, they added: “some spice” to the effort at each contract refresh.
For example, after the first contract, Cummins knew what to expect from its service provider. Using this knowledge, the company altered the contract fundamentals. The new goals it set rejuvenated everyone, adding life to the relationships.
– Joint problem solving: This was another key building block that helped Cummins solidify the buyer-provider relationship. In one instance, the service provider had difficulty keeping skilled people on Cummins account.
But Cummins—with the service provider’s backing—put a new clause in the contract that required certain employees to stay on its account for a set period of time unless they left the service provider altogether. Stability now reigns.
Thanks to its relationship with its provider, Cummins is in a much better place now than it was 10 years ago. It competes favorably with the top firms in its industry and it’s poised for growth—something it knows its service providers help.
Benefits like these are common when an organization’s contracts project delivers. If your contracting venture isn’t delivering as expected, learn from Cummins’ success.
Work hard toward building a long-term relationship with your service provider. It can help cut costs, increase customer satisfaction, and boost profits.
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