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Tech & Sourcing @ Morgan Lewis


One of the keys to building a strong long-term commercial relationship with a supplier is the establishment of a robust governance structure that will help manage daily practices and future business goals. A recent post by advisory firm ISG highlights 10 tips for developing a governance structure that will help customers develop and maintain successful working relationships with their suppliers.

Tips for developing this structure include the following:

  • Customers should take ownership over contract compliance. Although an obligation may fall on the supplier under the terms of the contract, the customer should consider taking an active role to ensure that the supplier fulfills its commitment. For example, if the contract requires that the supplier submit an annual SOC report, the customer may consider reminding the supplier in advance of its obligation, or following up with the supplier if it appears the supplier has missed the submission.
  • Customers and suppliers should both take active roles in the change control process. In any long-term relationship, there will be a need for change, and it’s important that both the customer and the supplier know the contractual parameters around change control and that both actively engage in the process. Active engagement allows changes to be agreed to and implemented more effectively.
  • Customers and suppliers should make an effort to address contract issues early. If an issue regarding the contract arises, it is important for the customer and the supplier to address the issue as soon as possible, including escalating the issue as appropriate and/or required.
  • Customers and suppliers should establish a routine for reviewing service performance. Service levels are an important mechanism for gauging a supplier’s success in delivering the contracted services, but they are only effective if the customer has complete and accurate performance data. The customer and supplier should consider establishing a method for delivering and reviewing the performance data from the start, allowing the customer to monitor the level of service to determine if any changes need to be made.

For other tips in managing suppliers, read the full post.