Most people use a Request for Proposals (RFP) process to select a vendor to provide a service or a product. To ensure your continued success, the steps you take after choosing the best vendor are equally important. In my February 2004 article, entitled "Preparing to Purchase," I recommended the following steps for the RFP process:



  • Conduct research


  • Hold meetings inside and outside of your company


  • Assemble an RFP team


  • Draft and publish the RFP


  • Conduct vendor reviews


  • Call references


  • Compare the bids


  • Award the bid


  • Receive the product or service


    By creating an RFP team and following the process explained in the article, you increase your chances of success in purchasing equipment, software and services. By taking your time and building an RFP that works, you'll select the best vendor for your company.


    Now what? How do you ensure your continued success? How do you make sure that the vendor meets its obligations and delivers the best products and service? There are five rules to follow:


                1. Develop a fair and equitable contract with a measurable service level agreement (SLA).

                2. Monitor and measure the performance of the vendor.

                3. Conduct regular reviews.

                4. Stay informed about changes in the industry.

                5. Maintain your professionalism.


    The Contract

    A good contract protects the buyer and the seller. During the RFP process, you told the vendors what you needed, and the vendors explained what they could provide. This exchange of information should make drafting the contract easy.


    By conducting the initial contract review during the RFP, the contracting process can move faster. Include your company's standard purchase agreement in the RFP, and ask the vendors to provide any comments or exceptions in their responses. If a vendor requires that their contract be used, require them to include a copy of the contract with the proposal.


    Whichever contract you use, make sure a legal professional reviews the document. Your company's legal team is carefully trained to make sure that your company's interests are protected. Also, seek out any needed assistance from these experts early in the process.


    The Service Level Agreement

    Every contract for equipment, software and services should include a service level agreement. Included in the SLA are: measurable levels of performance, steps to correct performance failures, escalation procedures and compensation/reimbursement for continued failures.


    To make the SLA enforceable, you must have a system to monitor and measure the performance of the vendor. For equipment, measurements may include processing speed, actual throughput and downtime. Software metrics may include system crashes, CPU time and functionality. Services should be monitored for timeliness and accuracy.


    The vendor should spell out what action they'll take if the equipment or service doesn't meet the established standards. Contract language should define response times for service calls or availability of telephone support. Certain situations may call for a technician to be on site during peak times. Special clauses are needed if the shop operates outside of normal business hours, such as weekends or third shifts.


    Sometimes, the vendor's initial response may not solve the problem. To cover these situations, the contract should describe how the issue will be escalated to higher management in the customer's and the vendor's companies. This part of the contract explains how the problem will be resolved and how progress on the issue is communicated between the parties. The communication steps should include e-mail notification, conference calls and face-to-face meetings.


    Repeated service failures or unsolved problems may cause the customer to incur expenses, (including overtime) productivity, unusable material and possible fines for missing deadlines. The contract should provide a method for the customer to be compensated by the vendor. The compensation can range from a penalty based on a percentage of the pricing to a full reimbursement.


    If You Don't Measure It, You Can't Manage It

    In order to claim any refund, you must have accurate records of the vendor's performance and the actions taken to resolve issues. Accurate recordkeeping means tracking how the machine performs each and every day. Operators must record start and stop times, as well as the volumes processed. Logs should indicate when a service call was placed, when the technician arrived at your site and when the machine was back in service. Don't rely solely on the vendor's tracking system; develop your own system.


    For services, accurate logs are critical. The logs should include when work is received, when it's processed and when the work is completed. Anytime a deadline is missed, you should be alerted. All errors or complaints must be recorded, as well as how the issue was addressed.


    Software performance may be more difficult to track. Your company's information technology department should be able to track system crashes and similar failures. Programmers should keep track of how much time they spend working on new projects, debugging programs and solving users' problems. Time spent with the vendor's telephone support must be recorded in the log.


    The Reviews

    Keeping logs is only helpful if someone's looking at the information. Reviews of the logs should take place on a daily, weekly, monthly and quarterly basis. Frequent reviews will help you spot problems as early as possible. Daily reviews of logs will alert you if an SLA was missed or if equipment isn't working. If there isn't a resolution noted in the log, follow up with phone calls.


    Weekly reviews are important for a new product or if the work is conducted off site. At each meeting, use the previous week's minutes as a starting point. There should be a set agenda for topics such as new business or problem resolutions. Someone is assigned to take minutes, which are distributed and delivered to everyone participating in the review.


    While daily and weekly reviews provide snapshots, monthly and quarterly reviews provide the long-term view. Patterns of successes and failures are much easier to identify in these reviews. To be more useful, formal agendas should be set. For example:



  • Introductions of new review participants


  • Overview of changes for previous month/quarter


  • Outstanding issues (service, contract, pricing)


  • Expected business changes


  • Internal customer issues


  • Planned upgrades of service or technology


  • Goals for next month/quarter


    For work that takes place at the vendor's location, you should alternate the reviews between your office and the vendor's shop. Visiting the vendor sites gives you an opportunity to watch your work being processed or your equipment being built. ·


    Education Is a Journey, Not a Destination

    You make your vendor selection and negotiate your contract based on the best information available today. What about tomorrow? What changes are taking place that may impact the equipment, services or software that you're buying? What changes will you have to make to ensure that your company is still getting the best deal possible?


    While no one can predict the future, everyone can be prepared. The way to prepare is by staying informed about what's happening in the industry. And that's a process that never stops.


    There are several ways to keep up-to-date about changes taking place in the mailing industry. You must dedicate time to read as much as you can. Every issue of Mailing Systems Technology includes valuable information. You should read all of the articles, not just the ones that have a direct impact on you today.


    And you don't have to wait for the next issue to be published to stay up-to-date. Visit regularly. The "News" section features information on equipment releases and industry changes. The "Discussion Board" is an excellent way to exchange ideas and get help from other managers and vendors. You can even post questions anonymously to the "Discussion Board."


    Attend the regional and national trade shows. Budgets are tight, but do everything you can to get there. Participate in your local Postal Customer Council and Mail Systems Management Association chapters. Go to meetings ready to ask questions and take notes. Don't worry about looking stupid. Vendors love to explain their products, and speakers crave audience participation.


    When you learn something new, put the topic on the agenda for your next quarterly review. Ask your vendor how they plan to meet new regulations or take advantage of new technology. Determine if the changes in the industry will impact your pricing or SLA. Work with your vendor to provide the best possible results for your company.


    It's Business, Not Personal

    Whether everything goes perfect with your vendor or the project is a complete failure, maintain your professional demeanor. Purchasing, contracts and SLAs are about your business, not about you.


    You may or may not like the vendor's account representative. Unless the representative is breaking the law or violating your company's policy, don't worry about whether you like them as a person. You aren't getting paid by your company to make new friends; you're getting paid to manage a contract.


    If you do become friends with the account representative, you must be careful. You can't give the vendor leeway just because you enjoy having dinner with the account representative. And because you played golf with someone doesn't mean that SLAs don't have to be met. Separate business from pleasure, and keep your company's interests ahead of your own.


    The Next Contract

    When the contract with your vendor expires, you'll have three options: automatically extend the contract for another year; rewrite the contract with the existing vendor; or publish an RFP to select a new vendor. If you've managed the existing contract properly, you'll know your next step before the contract expires. And your experience will help you prepare better contracts and SLAs the next time around.


    Managing vendors usually isn't a lot of fun. But by following a process of setting standards, measuring performance, conducting reviews, and keeping informed, it will not be painful either.


    Mark M. Fallon is president and CEO of the Berkshire Company, a consulting firm specializing in mail and document processing strategies. For additional information, visit

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