The Limitations
There are two limitations. First, these tools cannot be a substitute for face-to-face interactions; it can only serve to monitor expectations that have been mutually agreed upon. Second, the tools are still evolving, and there is a learning curve and an adaptation curve associated with them.
Faced with the downhill industry trend in the U.S. auto industry, a leading Detroit-based auto company, decided to get tighter in managing its provider. The provider had been month-after-month painting extremely positive pictures in the reports to the company, however the overall performance of the company didn’t seem to reflect those positive effects. The company’s management decided to automate the process and go ahead with Oblicore’s product, Oblicore Guarantee, to monitor the vendor performance. “One interesting thing we found right away is that providers are not performing at the levels they claimed. They, honestly, had different interpretations on how the metrics were calculated. The benefit of using the tool is that once you have systematized, automated the calculations, there is really no debate on how to calculate it. You don’t have to debate every month,” said Performance Manager, Sourcing Management and Governance Team of the automobile company. The company also points out further expectation from the tools, which Oblicore’s tools currently lack. “The time to get it up and running was not as fast as I would have liked it to be. Today in the auto industry, one or two months to get the product running is too long. A perfect scenario will be, something that is so flexible that it gets up and running in a couple of weeks instead of a couple of months.”
Apart from the functional limitations of the tools, Sivakumar of Ariba points out three non-technical limiting factors for these tools:
- They increase the transparency between the customer and provider relationship that might become a challenge
- Today providers don’t want to measure inefficiencies. Unless one measures inefficiencies today, you can’t talk about the improvements tomorrow
- The basic knowhow of these tools is the next factor. Sometimes when you approach the providers or customers, they cannot understand the benefits offered by these tools.
These tools can be of great help for the new contracts or at the time of taking decisions related to contract renewal. But to include them in an existing relationship is a very difficult decision. Many long-term sourcing contracts that are already underway still use manual data. Moving to such tools midway would require tremendous effort and readiness to accept the kind of transparency these tools offer. Questions Sivakumar, “Are the provider and customer ready for it or they are happy with the fact that “ignorance is sometimes bliss?”. The answers have to come from the customer and service provider themselves.
(For feedback, contact Namita at namitag@cybermedia.co.in)
| Case Study - III |
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Customers: A leading automobile manufacturer
Provider: Oblicore
Challenges: The U.S.-based automobile manufacturer had been receiving the traditional spreadsheets of data from the providers showing the service levels. The data always showed a very rosy picture and people lost faith in the numbers. Last year, they started talking to Oblicore but the contract was not signed until April this year. “About a year ago, our company went through lot of cost pressure, obviously being in the automotive industry lot of stuff is going on. Our scope of outsourcing tripled in size so when it comes to depending on a tool such as Oblicore, the decision took a lot of time,” explained Performance Manager, Sourcing Management and Governance Team of the customer.
Solution: “We have had past experiences where everything is always green, everything is always perfect. So with these tools we wanted to own the quality of data when it comes to SLA performance. Our vision with Oblicore was to maintain the standard way across all service providers, to report the data and it would give back to our people the confidence in numbers,” added the Performance Manager. Since the contract with Oblicore to use Oblicore Guarantee was signed in Apr. ’08, the product specifications were revealed after the signing. It took the manager and his team about two months to launch the product as per company’s specifications. It is too early for them to comment on the performance, but the experience till date has been quite fruitful. “When we flowed the data that we had received in the form of manual sheets from the provider in Oblicore’s software, we found that everything was not perfect as it was in the manual state,” said the company’s source.
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