Steps to take when a supplier pushes back - Supply Management

Steps to take when a supplier pushes back

5 June 2014 | Stephen Rowe

Stephen Rowe, CPO, Parmalat AustraliaLast month a SM reader asked about supplier push back: “Some unforeseen problems have arisen with an outsourcing project and one of our suppliers isn't willing to help fix them. How should we handle push back from suppliers?”

Donald Rumsfeld’s speech [to the US Department of Defense in February 2002 about weapons of mass destruction in Iraq] is a favourite of mine to consider here. Problems are “unforeseen”, and not “unforeseeable” - so someone has missed key elements in their futures thinking. The issue is who and what else could have been missed?

What we do know is that this is an outsourcing project. So I would presume a supplier selection process was concluded. Presumably we have a contract but, because it is still a project (rather than a contract) then I must assume the initiative is still in the “transition in” phase. We also know that one of the suppliers is not prepared to fix an undefined problem.

In that case it becomes a motherhood question of who is responsible. If the supplier is at fault then you should resort to terms in the contract covering specifications, change control process and objectives/intent of the agreement. An outsourced provider is still a service provider and should be held accountable (I am assuming there is no primary supplier agreements and this is not a second tier supplier of that arrangement).

If it is a client at fault then utilise change control but generally if a supplier is pushing back there are broader issues and a root cause analysis should be undertaken to identify the core issue not just looking at the effect. Some of the issues could be:

• We have a bad fit

• We have treated the supplier poorly – every dog will bite if it is kicked sufficiently

• They are performing in accordance with contract? Not my problem? Is the issue part of a domino effect rolling in from another source/supplier?

• Is there a personality clash? How are the companies and or account management relating to each other?

Each of the above can be fixed, and needs to be fixed before the “problem/effect” can be resolved.

It would be sensible to bring all parties together to work to find possible solutions, then establish who is going to pick up which parts of the resolution. If the supplier is simply being awkward for the sake of it, recourse to the performance management clauses with half an eye on the termination provisions and start dusting off the “transition out” plan. I am assuming there is one as it is the first law of outsourcing (develop the transition out plan, then the transition in plan then figure out the outsourcing scope within those parameters).

☛ Stephen Rowe is chief procurement officer at Parmalat Australia

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