Sourcing – Selecting and Managing Partners

So, you have decided it is not profitable to develop some of your product yourself, but to get those components developed in the supply chain… but Where do you go? How do you know if they are right for you? Can you trust them?

Well hopefully in making the decision to not do it all yourself, but to find a partner or supplier, you have already benchmarked your own capability with the capabilities that exist elsewhere, so you have a source and an initial assessment of the potential suppliers. If not you really need to go back and re-appraise the decision on Make/Buy!

Typically that initial source of supplier information is from word of mouth, a trade body membership catalogue, reports from technology analysts or researchers (e.g. Gartner, Forrester, IDC, Ovum, Frost & Sullivan).

For most of the ‘physical industries’ (e.g. mechanical manufacturing) location of the supplier is significant to ensure a consistent logistical delivery, minimum transport costs etc. With software and an interconnected world, at first sight, this is not an obvious priority.  My personal experience however is that ‘accessibility’ of the supplier will determine the amount of time that you will spend on oversight and the supplier relationship, especially when there is a need for ‘intervention’.

Even for software supply, a nice glossy sales brochure, some historic glowing testimonials and sample CVs doesn’t give you the same information that you will get as a seasoned professional in being invited for a visit into their development offices. Be prepared to withhold judgement on the sales ‘spin’ until you know the details of what you will be getting.

Safety, Security and Quality are ‘cultures’ which all employees have to live… and the supplier’s ethos can usually be picked up from a visit to the development offices, much like you would when visiting a mechanical workshop; If tools and consumables are not neatly organised, put away after use and obviously well maintained – you need to be going somewhere else! If there is an absence of fire extinguishers, or access control mechanisms, it will be self-evident that these traits are not cultural.

With software developers, if a randomly selected engineer cannot tell you in detail how he interacts with the change control and configuration management processes, without resorting to the manuals, then walk away.

For any ongoing project, the software manager and project manager should know who their key technical players are (and not just the senior people, the real influencers); what the significant aspects of the product architecture are; the complex or risky areas of the development and what they are doing to understand them; and be at ease discussing the sort of metrics that indicate quality components are being generated on time e.g. the number of iterations of a component (from version control), where those evolutions were triggered (i.e. the types of error that escaped, where they were detected and resolved); how much effort is being consumed, how that relates to the plan, estimates and the consumption of contingencies.

You are going to want the same information made available to you, on your project, to give you the confidence they are conveying. If the information you need is not available, then you can easily imagine you will be asking for it later, once a crisis is looming or already impacted!

If it’s a small supplier, where all the design aspects are in 1 person’s head, who is working vast numbers of hours, including weekends… then irrespective of the heroic efforts… it might imply fragility that you cannot depend on.

Ideally you need a supplier who shares the same culture and ethos with regards the attributes you espouse, after all your product, like a chain and weakest link, will typically demonstrate the quality attributes of the poorest component.

You don’t want to be micro-managing your supplier, you want him to have the level of information to resolve his own problems and be a good supplier, whilst appraising you of risks that you need to jointly manage. Expect to need to invest and develop some of these traits in your supplier, so that they deliver what you need.

Ideal commercial arrangements should, like managing children, incentivise and reward correct behaviour, and admonish wrong behaviour without being punitive. Manage not only the development within the supplier, but your rights to the work, to give you the flexibility and portability you need, in the same way that the Make/Buy decision will have informed you about the level of dependence and exposure protection you need. In my experience, escalation to punitive legal clauses means your product is lost!


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