Evolving Relationships

Commercial businesses and governmental departments can be some of the largest and most diverse organisations in any county. No matter the strengths of its internal capability there can never be enough expertise and enough flexibility in staffing to cover all its activities and transformational projects. This is where the benefits of external suppliers and collaborations can come in.

These relationship are not always easy. If the contracts with suppliers are weak, then much of the risk and liability will return to the procurer. Over time the relationships can become too close, professional distances closed to the point where the business and the supplier are all but indistinguishable from each other. Perhaps an unhealthy dependency has grown where jobs and skills are backfilled by external staffing at high cost, with no knowledge transfer to the business, and with no clear goal to bring reduce those dependencies. The outcome is inevitably soaring costs, cosy contractual relationships, and no dynamism in the contracting and supply of resources.

So how do we break these cycles? One clear way is to make the most of the biggest strength of a large business or government, its massive buying power. It is this that makes them the kind of client that any business will be desperate for. Lack of cooperation and sometimes the lack of will in negotiations and procurement can mean that fragmented sections of an organisation can be isolated in their dealings with external companies. This subtracts greatly from their purchasing power, and the resulting disjoint patchwork of agreements across areas can lead in too many cases to a lack of harmonisation and cost efficiency.

Definition of the purpose of contracts is also essential. What resource is being provided? If it’s a lack of internal expertise knowledge transfer and training should be a strong part of the contract. If it’s to provide a service that is truly external to the businesses core purpose then clarity around the boundaries of responsibility, the quality of service, and the penalties for not meeting agreed standards should be hardened before any contract is brought into being.

Working with suppliers to meet our own strategic needs is core to the success of any business, but some of the challenges involved in large organisations are unique to the scale. The question is never whether or not there are benefits to focusing your business through the use of external services and skills, but how to maintain and adapt those connections successfully as the environment changes. Keeping professional relationships healthy is as much about being aware and honest to ourselves about the position they are in as it is about the paper they are written on.