It is critical to build relationships with suppliers who can help you create a competitive advantage and ensure your success in a turbulent business environment. This rigorous five-step project management approach provides tools for identifying innovative supplier partners and incorporating key business requirements into the selection process.

1. HOW TO SELECT INNOVATIVE SUPPLIER
PARTNERS USING A 5-STEP PROJECT
MANAGEMENT APPROACH
Monica D. Johns
President and CEO
Clarity Management Consulting
©2009 Clarity Management Consulting Inc.

2. Contents
Introduction
The need for innovative suppliers
The need for a project management approach
The 5-Step Project Management Approach
to Selecting Innovative Suppliers, including:
Tools for identifying forward-thinking supplier
partners
An approach for capturing the requirements of a
diverse group of stakeholders
Tools for evaluating potential partners
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3. Introduction
The need for innovative suppliers
Need to reduce cost and advance innovation
Need strategic partnerships with innovative
suppliers who can accelerate desired
improvements
Step change improvements versus incremental
change
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4. Innovative Suppliers Dramatically Influence
Progress Toward Strategic Goals
Desired State
(your goal)
Step
change
Incremental change
Current State
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5. Introduction
The need for innovative suppliers
Strategic partners are truly innovative
They provide systems needed to compete on
quality and customer satisfaction
They have industry-leading capabilities and
can achieve greater efficiencies
Technology is a key driver
Partners typically have a progressive business
model
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6. Introduction
The need for a project management
approach
Organizations have business activities that
span functional/organizational lines
Multiple end-user groups with different needs
Goals and objectives vary
Scarce resources spread across a number of
activities
Minimal documentation of business
requirements in many cases
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7. Introduction
The need for a project management
approach
Pressure to find a supplier means choices
are driven by current state, not future state
Selection decisions affect the organization for
years
Decisions either facilitate progress or impede it
So what is a project management approach
to finding innovative suppliers?
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8. Use PMI® Process Groups as a Framework
for Structuring the Selection Process
Initiating Planning Executing
Identify Team Scope Risks RFP
and Timeline Criteria Evaluation Tools
Stakeholders, Requirements Expectations Solicit Proposals
Gain Approval Desired State Prospects Evaluate
Metrics Negotiate
Controlling (ongoing) Closing
Scope Feedback Selection
Schedule Documentation Communication
Requirements Communication Documentation
Cost
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9. Initiating
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10. Initiating
Identify core team, sponsor, and
champion
Sponsor is executive-level stakeholder
Champion is mid-level manager with
authority over resources
Core team is a subset of those affected by
change
Can commit time to selection process
Can ensure buy-in, influence others
Includes key subject matter experts like IT
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11. Initiating
Identify and engage stakeholders
Review contracts with existing supplier
Identify all business units that use the
contracts
Rank by volume of business under contract
Define high, medium, and low volume levels
Group business units accordingly
Identify communication protocol and
determine level of engagement for each
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12. Initiating
Identify and engage stakeholders
Engage business units using the protocol
Adjust approach as needed for unique situations
Conduct kick-off meeting with stakeholders
Find out how they want things to look in the future
Communicate regularly with all groups
Essential to successful sourcing activity
“Pay me now or pay me later”
Gain approval to go forward
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13. Planning
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14. Planning
Define scope
Business units, customers, other affected groups
Phased approach might be more cost-effective,
easier to get buy-in
Define timeline
Start with contract expiration and work backwards
Identify major milestones affected by new contract
Define selection activities and timing of resources
Include areas of schedule risk, such as sourcing
approvals, availability of technology, system changes
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15. Planning
Communicate scope and timeline to
stakeholders
Create opportunities to get feedback
Use engagement protocols to your advantage
Incorporate stakeholder feedback as
appropriate and finalize
People will be concerned about change
Regroup or reboot if necessary to get them onboard
Create revised scope and/or timeline as needed
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16. Planning
Brainstorm about desired state and goals
for new supplier
Get a picture of where you want to be in 2-3 years
Decide how new supplier must create value
Determine which features and benefits are missing
with current supplier/solution
Want to move from having suppliers who just sit on
the sidelines
Want real value partners who support the vision
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17. Planning
Define business goals and requirements
Gather information
Conduct ‘desired state’ brainstorming sessions
Organization’s vision and strategic plan documents
Existing contracts and metrics
Stakeholders and functional groups
Customers, partners, and other suppliers if
applicable
Research the industry to identify standards, trends
Compare current supplier’s performance and
capabilities to industry trends
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18. Planning
Define cost parameters
Current cost
Potential efficiencies
Targets for new contract
Incorporate targets set by senior management
Include improvements over the life of the contract
Use information from industry research
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19. Planning
Use requirements to create templates for
identifying potential partners/bidders
Define characteristics of ideal supplier partner
including capabilities, vision, expertise, technology
Define and weight appropriately
Use templates to rank
Invite prospects to give a presentation
Use templates to create interview questions
Evaluate, rate, and rank presenters to
create bid list
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20. Sample Interview Template
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21. Planning
Define risk management strategies
Identify risks
Changes to schedule
Modifications to requirements or business model
Changes in cost targets
Availability of resources
Technology upgrades
Changes in other suppliers
New requirements from customers, government
Develop mitigation plans and contingencies
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22. Planning
Caution
Allow adequate time for planning
Don’t underestimate time needed for implementation,
especially with multiple stakeholders
Change is not always welcome
Long-term supplier relationships hard to break
Critical to have stakeholders on board
Communicate benefits of change on a regular basis
Treat current supplier as you would any prospect
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23. Executing
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24. Executing
Construct RFP based on stakeholder
requirements
Goals and objectives
Timeline for bid process and implementation
Business description and scope
Requirements for key elements of the business
Pricing matrix
Historical data, Service level requirements
Create response template for bidders to use
Provides a standard format
Facilitates evaluation of responses
Follows structure of RFP
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25. Executing
Review, finalize, distribute RFP
Provide additional information and
clarifications at bidders’ conference
Review program basics, expectations, vision
Review RFP, contract implementation timeline
Solicit feedback concerning requirements or
information provided
Explain response template, pricing matrix
Establish ground rules for communication (e.g.
questions to be submitted in writing)
Address general questions
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26. Executing
Create tool for evaluating RFP responses
Develop weighting and rating template
Should follow RFP response template
Evaluate and rate responses, pricing
Compile questions to clarify responses
Discuss questions in person with individual
bidders
Responses to questions should also be rated using
similar evaluation tool
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27. Sample RFP Response Evaluation Template
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28. Executing
Identify top contenders for next round
Utilize other evaluation tools to get
additional insights
Site visits and reference checking
Results should corroborate quality of RFP responses
Select final set of bidders for negotiations
Incorporate any new information and review impact
Review with champion
Eliminate non-contenders
Final recommendations and approvals
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29. Controlling
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30. Controlling
Controlling is ongoing
Allows for incorporation of new information
Forces the team to reevaluate as needed
Evaluate potential changes to scope, etc.
Ensure involvement of key team members
Regular core team discussions
Utilize communications protocol
Engage leadership when new information surfaces
Ensure consistency of RFP documentation
All documents must reflect the latest information
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31. Closing
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32. Closing
Select supplier partner
Notify bidders of decision
Schedule contract award
Finalize communications on contract award
Develop plan for transition from current
supplier
Develop contract documents
Statement of Work (SOW)
Project Plan
Service Level Agreements
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33. Summary
This 5-step project management approach
provides:
Tools for identifying strategic supplier partners
An approach for capturing the requirements of a
diverse group of stakeholders
Tools for evaluating potential partners
This approach will enable you to:
Find innovative partners with world-class capabilities
Move toward a sustainable, scalable solution
Accelerate achievement of strategic goals
Gain a competitive advantage with your customers
©2009 Clarity Management Consulting Inc. 33