Why the customer’s decisions matter to supplier performance
Jon Wensley
The supplier relationship is not going well.
Delivery is late. Costs are rising. Meetings are becoming uncomfortable. Someone suggests a formal escalation and somebody else asks whether it is time to go back to market.
That may be the right response.
But before replacing the supplier, I would want to ask a question about the next one.
What would we do differently to help them succeed?
If the answer is “nothing”, we should at least consider whether the replacement will inherit the same difficulties.
Suppliers can underperform. They can overpromise, allocate unsuitable people or fail to deliver what they have agreed. Customers need evidence, clear remedies and the willingness to act when improvement does not follow.
But supplier performance also depends on decisions made inside the customer’s organisation. Those decisions can be less visible in the monthly report, even when their consequences are considerable.
A specification can be precise and still be wrong
A detailed specification creates an impression of control. We have written down exactly what we want, so surely the supplier can now provide it.
Sometimes that is true. Sometimes the specification describes a preferred solution without properly explaining the problem it is intended to solve.
Consider an illustrative service procurement. The business requests a particular number of people with specified skills, and Procurement negotiates attractive day rates. The supplier provides those people.
Several months later, the expected transformation has not happened.
Was the supplier responsible for that transformation? Or did we buy additional capacity, with the customer retaining responsibility for priorities, work allocation, design decisions and acceptance?
Those are different arrangements. Neither is inherently wrong. Trouble follows when the commercial model buys one and the leadership team expects the other.
Providing people is not the same commitment as delivering an agreed outcome. If outcomes matter, the responsibilities, dependencies and evidence of completion need to be understood before work starts.
That includes the supplier’s responsibility to challenge an unworkable brief. A credible partner should raise material concerns, rather than quietly accept them and wait for the change request.
Paradoxically, one sign of a good supplier can be its willingness to say no. A supplier that challenges an impossible timetable, exposes a missing dependency or refuses to price an undefined requirement may initially feel less accommodating than one that simply agrees. The difference often becomes apparent later.
Requirements keep arriving after the price is agreed
Another familiar pattern begins with a clear scope and a reassuringly fixed price.
Then different teams start contributing requirements. An integration is added. A process changes. A reporting request turns out to require new data. The launch date remains where it was.
The customer sees the additional requests as reasonable detail. The supplier sees more work than it priced.
Soon there is a difficult conversation about why the supplier is charging extra for things the business regards as obvious.
Some change requests are opportunistic. Others reflect work that was never included. The answer depends on the agreement and the evidence, not simply on which party sounds more indignant.
Procurement can help by establishing a workable scope, identifying assumptions and making change decisions visible. The business must also decide what matters enough to justify extra cost or time.
A fixed price does not make an evolving requirement costless. Somebody absorbs the additional effort, reduces something else or accepts a different result.
Our internal customer may have several voices
Organisations sometimes ask suppliers to behave as though the customer were a single, coherent decision-maker.
The supplier’s experience can be rather different.
IT wants a technically robust solution. Operations wants minimal disruption. Finance wants cost removed this year. A programme team wants to meet the announced date. Different sites want different variations.
Each concern may be reasonable. Together, they can produce contradictory instructions.
If nobody has authority to resolve those conflicts, the supplier is left trying to infer which instruction will survive the next meeting. Work is repeated, decisions are reopened and delivery slows.
That does not excuse the supplier from seeking clarity. It does mean the customer needs a named owner who can make decisions, secure specialist input and escalate disagreements.
Governance earns its place when it resolves something. A weekly meeting that circulates the same unresolved questions is an expensive diary entry.
We talk a great deal about supplier capability and rather less about customer capability. Complex suppliers need competent customers: people able to make decisions, reconcile competing requirements, provide dependencies and distinguish between responsibilities the supplier owns and those the organisation still retains.
Dependencies do not disappear into the contract
Imagine a system implementation in which the supplier needs clean data, access to technical staff and a decision on the future process. None arrives when expected.
The milestone slips. The report records a supplier delay.
That description may be incomplete. It may also conceal the decision needed to get the work moving again.
A useful delivery plan makes dependencies explicit: what is needed, who provides it, when it is required and what happens if it is late. The same discipline should apply to supplier commitments and customer obligations.
The supplier should identify problems promptly, explain their impact and propose a way forward. The customer should act on the obligations it has accepted. Neither should discover a long list of supposedly critical dependencies only when delivery is already in trouble.
I would want performance discussions to distinguish missed supplier commitments from delayed customer decisions and genuinely shared problems. Otherwise the reporting becomes a mechanism for assigning blame while the underlying work remains blocked.
Implementation belongs to someone after signature
Awarding the contract is a milestone. It does not mean the organisation is ready to use what it has bought.
Employees may need training. Old tools may need retiring. Processes may need changing. Sites may need time to adopt a new service.
Some of that work can be contracted to the supplier. Some requires decisions that only the customer can make. The allocation needs to be explicit.
If the business buys a new platform but never removes the old one, it can end up disappointed with both the supplier and the savings result. The new service may be operating exactly as contracted while the promised benefit remains unrealised.
The relevant question is who owned adoption and the removal of the existing cost, and whether they had the resources to do it.
This is where supplier management connects with the procurement accountability problem. Forecast benefits frequently depend on work beyond negotiation and contract award. Leaving that work unowned does not transfer it to the supplier by default.
Suppliers still have to do their part
None of this should become an invitation for suppliers to explain every failure as a customer problem.
A capable supplier should assess whether it can deliver, test important assumptions and be honest about the resources required. It should bring problems forward while options remain open and answer for failures within its control.
If it has accepted responsibility for managing a dependency, it cannot simply point to the dependency when the work fails. If it has promised an outcome, supplying a collection of busy people does not by itself fulfil that promise.
Sometimes the evidence will show that the customer has done what was required and the supplier has not. Stronger remedies, commercial action or replacement may then be entirely justified.
The point of looking at the customer’s contribution is to improve the diagnosis. It is not to dilute supplier accountability.
Before we go back to market
Changing supplier also has a cost. Transition consumes management attention, knowledge has to move, services may overlap and a replacement needs time to understand the environment. None of that is an argument for retaining a poor incumbent. It means that replacement should solve a diagnosed problem rather than substitute for diagnosing it.
Before launching a replacement exercise, I would examine the original requirement, the actual instructions given and the decisions that remain unresolved.
Did we buy the service we now expect? Did the commercial model support the intended outcome? Were material changes agreed? Could our owner resolve conflicting demands? Did we provide the access, information and implementation capacity we promised?
I would ask equivalent questions of the supplier. What did it commit to, where did it fail, what did it warn us about and what has it done to recover?
That review may strengthen the case for replacing it. It may identify changes needed on both sides. Occasionally, it may show that the business is judging the supplier against an expectation it never bought.
A new supplier can change the relationship. It cannot make the customer’s unresolved decisions on its behalf.
If we want the next agreement to succeed, understanding those decisions is part of the procurement work too.