Supplier Management Can’t live with them, Can’t live without them!

Topics What is a Supplier Issues With Suppliers Benefits of Suppliers Managing Suppliers Lessons Learned

What is a Supplier? A Supplier provides goods or services in support of your project Also referred to as – Contractor – Subcontractor – Provider – Industry Partner

What is a Supplier? A Supplier introduces risk to your project A Supplier offers opportunity to your project A Supplier can make or break your success!

Issues With Suppliers Suppliers introduce risk to your program through: Late Deliverables – Late interim or final product – Reviews postponed or cancelled – Staffing late to plan Quality Issues – Reliability lacking in deliverables – Documentation missing or poor quality – Consistency lacking in deliverables

Issues With Suppliers Suppliers introduce risk to your program through: Cost Overruns – Over staffed effort – Over engineered solutions – Schedule and/or quality issues Technical Issues – Requirements not understood – Program process not understood – Applicable standards not applied

Benefits of Suppliers Suppliers introduce opportunity to your program through: Specific Knowledge Areas/Skills – Program capability can be expanded by existing supplier knowledge – No time or budget needs to be spent developing knowledge Proven Quality Provider – New effort can include mature product from supplier – Leverage past performance and previous certifications Strategic Alliance – Combination of two mature products to meet new contract requirements – Equal investment interest from two groups to work single effort

Benefits of Suppliers Suppliers introduce opportunity to your program through: Predetermined Staff Duration – Staffing belongs to supplier and leave program when supplier is complete – Supplier holds union agreements, pension responsibilities, training obligation Additional Benefits – Economy of scale when supplier provides a product for multiple contracts – New effort can include mature product from supplier – Best practices and lessons learned are applied to new effort

Managing Suppliers How can the risk be mitigated? And the opportunity realized?

Managing Suppliers How can the risk be mitigated? And the opportunity realized? Requires: – Detailed Procurement Documentation – Proactive Management of Deliverables – Proactive Oversight

Managing Suppliers Detailed Procurement Documentation Suggestions: – Requirements Specification Specific Product Requirements Include Compliance and Verification Requirements – Statement of Work Details Contract Performance Requirements including program management, test, security and quality Specifies Deliverables including management plans, technical plans, financial reports, status reports, test artifacts – Contract Specific Contract Direction for Period of Performance and Budget Includes incentives such as Incentive Fee, Award Fee Specifies Terms and Conditions such as Termination Liability, Warranty, Splits

Managing Suppliers Proactive Deliverables Management – Work Breakdown Structure (WBS) Illustrates understanding of effort Include CWBS for narrative of items Make sure tasks are grouped logically – Integrated Master Schedule (IMS) Links tasks with resources within overall schedule Include ‘Giver’ tasks for deliverables Include ‘Receiver’ tasks for dependencies

Managing Suppliers Proactive Deliverables Management – Cost Performance Report (CPR) Status of tasks against WBS in dollars and hours Provides explanations of variances to baseline – Management Plans Program Management, Risk Management, SE / SW, Etc. Clearly describes processes for the effort Includes updates if situations change

Managing Suppliers Proactive Technical Oversight – Technical Performance Measures (TPMs) Critical performance measures with trending May flow from requirements or SOW Reviewed at milestones, PMRs and in status reports Provides specific insight into design and development – Quality Defect occurrences and rework percentages in status reports Meetings to disposition peer review results and test status Formal and/or informal audits of process and products

Managing Suppliers Proactive Technical Oversight – Reviews Milestone reviews for Requirements, Design, Test Risk meetings to flow in both directions Working groups for collaboration of details Status meetings to assess progress

Managing Suppliers Proactive Management Oversight – Earned Value Monthly or Weekly variances with CPI and SPI – Value of contract usually determines reporting frequency – Reporting at WBS Level 2 or 3 identifies specific risks Late starts and finishes with explanations Cost and schedule forecasting based on variances – Reviews Program Management Reviews Integrated Baseline Review Schedule Risk Assessments

Example #1 Monthly EV shows the number of on time finishes is trending up

Example #1 Monthly CPR shows CPI is trending up Monthly EV shows the number of on time finishes is trending up

Example #1 Technical status report shows TPM for MTBF is trending down Monthly CPR shows CPI is trending up Monthly EV shows the number of on time finishes is trending up

Example #1 Technical status report shows TPM for MTBF is trending down Monthly CPR shows CPI is trending up Monthly EV shows the number of on time finishes is trending up Quality is being sacrificed to get back on schedule by putting new or untrained workers on the tasks or overworking existing team!

Example #2 Weekly status meeting doesn’t include supplier Test Lead for 2 weeks

Example #2 Weekly status meeting doesn’t include supplier Test Lead for 2 weeks Test Description document peer review meeting is postponed

Example #2 Weekly status meeting doesn’t include supplier Test Lead for 2 weeks Test Description document peer review meeting is postponed Monthly IMS submittal includes small slip in interim product delivery

Example #2 Weekly status meeting doesn’t include supplier Test Lead for 2 weeks Test Description document peer review meeting is postponed Monthly IMS submittal includes small slip in interim product delivery Supplier personnel issue is causing delays in artifact delivery and initial slip could get worse

Lessons Learned Provide As Much Oversight as Budget & Time Allows – More oversight provides more opportunities for correction – Must be balanced with project budget and manpower Document All Assumptions – Document assumptions from proposal, requirements, design, development, delivery – Review regularly Manage All Dependencies – Dependencies on both sides need to be managed – IMS should track formal ‘Givers’ and ‘Receivers’ Communicate, Communicate, Communicate!

For Additional Information… See your Contracts Management Plan… Or your Process Artifact Library… Or the PMI… –

PMBOK Reference Project Procurement Management – Plan Purchases and Acquisitions – Plan Contracting – Request Seller Responses – Select Sellers – Contract Administration – Contract Closure ©2004 Project Management Institute. A Guide to the Project Management Body of Knowledge (PMBOK® Guide) – Third Edition Today’s topic focus area

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