Here is a published article that I wrote about P-4:
The Preferred Provider Partnering Program (P-4) - NCMA CM Magazine in March 2009 -
START YOUR EIGHT STEP
“PREFERRED PROVIDER PARTNERING
PROGRAM” ( P)
In your contracts management activities, it is likely nowadays
that you will eventually be asked by your employer to creatively and proactively try to further improve activities with some
of your entity’s preferred providers of products and services. “Preferred providers” are a pre-qualified
and select group of vendors that have been approved by the buyer for quality, on-time delivery,
and other factors. In my thirty year contracts management career, I have been asked to perform
such a proactive and creative activity several times. As a result, I have developed, out of necessity, what I call an
Eight Step “Preferred Provider Partnering Program “ (P). Set out below are the eight essentials
of such a P activity:
1. Identify your entity’s preferred providers with whom your entity
would like to build a stronger relationship.
2. Ask one (or more) of those
selected preferred providers to submit written ideas to you on how the preferred provider and your entity could further improve
their existing relationship and further enhance:
- Communications (e.g. doing mutual site visits, having mutual open house activities, creating mutual FAQ’s,
creating mutual relationship managers, establishing vendor and customer stewards, having mutual workshops,
causing mutual paperwork reduction, doing mutual long term planning, making mutual referrals to customers, doing
co-marketing, creating joint ventures, discovering mutual passions, not having warm fuzzy feelings but rather discovering
mutual synergies, creating team attitude, fostering mutual respect, developing non-adversarial attitudes, discouraging
us – versus - them mentality, being willing to mutually invest for mutual success, establishing initiative
governance mechanisms, improving diversity, insuring integrity, clarifying business ethics, having a party, etc);
- Innovations (e.g. developing impactful ways to do things that
could not be done before, creating reward systems for impactful innovations, making advancements to increase efficiency
and quality, discovering advancements to reduce risk, optimizing processes, increasing economies of scale, etc);
- Appropriate technology improvements (e.g. establishing
electronic billing, sharing appropriate knowledge capital, developing a mutual extranet, creating a quick payment
process, developing mutually rewarding technology solutions, etc;
- Preferred provider performance
(e.g. creating gain share incentive type activities, creating budget based
incentive type activities, doing periodic preferred provider assessments, etc;
- Your entity’s performance (e.g. having periodic assessments of your entity done by preferred providers, hearing the
preferred providers’ perception of what other suppliers think about your entity’s performance, receiving
objective observations and performance recommendations from preferred providers. etc;
entity’s risk reduction (e.g. creating methods for enterprises and projects
to efficiently identify, assess, avoid, reduce, transfer or intentionally retain risk as well as planning, implementing,
reviewing, assessing, and evaluating risk management plans, etc;
- Preferred provider’s
risk reduction (e.g. doing risk sharing, starting mutual incubator activities,
avoiding traps, etc; and
- Spend reduction / cost savings by your entity in acquiring the preferred provider’s
products and services (e.g. improving demand management, using contract
labor, improving budget due diligence, reducing project cycle time, improving project management, considering discounted
secondment, using alternative billing arrangements based on performance or budget compliance, off-shoring,
near-shoring, outsourcing, etc).
topics for solicitation of ideas from preferred providers are certainly not the only topics to consider. They are just
topics that are among the most important. So, encourage the preferred providers to submit other ideas that may not fit
into one of your listed topics for ideas. Also, there is a natural tendency for buying entities to place the greatest
importance on topic “H - Spend reduction /cost savings by your entity in acquiring the preferred provider’s
products and services.” This is certainly understandable. However, while spend reduction /cost savings ideas
are certainly important, don’t overlook the potentially very high values that could result from good ideas related to
communications, innovations, technology improvements, performance enhancements, and risk reductions.
3. Establish a written P
agreement with the selected preferred provider(s) that (among other things) states
that: (i) none of the P information submitted by the preferred provider
to your entity will be considered as confidential information; (ii) your entity is free to use none, any or all ideas
suggested by the preferred provider with any party without any restrictions or compensation whatsoever; (iii) your entity’s
details of any resulting initiative from the P activity will be confidential
information of your entity; and (iv) your entity and the preferred provider are not creating any employment relationship,
legal partnership, joint venture or other business entity in implementing selected initiatives .
From the ideas submitted by such a selected preferred provider,
your entity could pick and choose what specific initiatives (if any) suggested by the preferred provider that your entity
wanted to implement with that preferred provider.
Develop the implementation details of the selected initiative
with the selected preferred provider.
6. Implement the selected initiative.
Monitor the performance of the initiative.
perform written assessments of the success of the initiative to provide to the preferred provider.
Buying entities are increasingly relying on preferred providers to help meet the buyers’
visions and goals. In today’s environment, creating partnerships with these preferred providers is necessary for
success. The traditional view of buyer and vendor relationships needs to be replaced with the view of preferred suppliers
as business partners with a vital interest in the success of the buyer. Preferred providers functioning in such a partnership
can be viewed as an effective extension of the buying entity. The key to creating such partnerships is for the parties
to be proactive and to develop a “can-do” attitude.
Buying entities need to realize
that some of the most important people in their respective industries are – their preferred providers. When buying
entities get to know the preferred providers better, the buying entities are amazed at what the buying entities and preferred
providers can accomplish together. Call and visit preferred providers just to talk. Some of the best resources
for solving many of the tough problems that buying entities experience can be found within their preferred providers.
Likewise, preferred providers need to develop a genuine interest in their buying entities that results in a deep
commitment to their buying entities. The preferred providers need to think of partnering as an extension of value-added
thinking that focuses on making the buying entity better by providing viable solutions. This is how buying entities
are absolutely blown away by dedicated preferred providers.
Proactive can-do win-win partnering
opportunities are endless. The P activity described in this article is a great way to get the
ball rolling toward a viable partnering relationship.
The distinguished US scientist Linus
Pauling once said: “The best way to have a good idea is to have lots of ideas.”  The goal of such a P activity is to facilitate a win-win relationship between
your entity and your preferred provider(s) by generating a lot of ideas – some of which may turn-out to be good ideas.
Obviously, a P activity could also be conducted with any of your other non-preferred suppliers and service
providers (where appropriate). This P activity is certainly not the only way to improve relationships
with preferred providers. However, if you routinely use all or part of this P activity as one of several
resources when you attempt to improve relationships with preferred providers, you will be pleasantly surprised with the large
number of substantive and material communication-enhancement, innovation, technology improvement, performance-enhancement,
risk-reduction, and cost-saving/spend-reduction ideas that will be surfaced for possible implementation.
E. MILLER, a Texas and Missouri attorney, is a contracts management consultant who has worked in contracts management for
many companies in the last thirty years. He is a member of the Greater San Antonio Chapter of NCMA. Send comments
about this article to email@example.com.