Evaluating Your Supply Chain

"Your suppliers and vendors need to be capable and reliable partners"

Your supply chain forms a critical link in your ability to get your products or services to market. It consists of the suppliers and vendors that provide inputs that let you make your company's products and deliver services. Your suppliers and vendors have to be reliable and capable partners. Because they play such a critical role, you need to evaluate whether they can deliver reliably the products and services that your company needs.

It doesn't matter if you are a start-up, the federal government or somewhere in between. Consider three cases:

  • The startup - new website
  • A $40M healthcare company - enrollment and claims processing
  • The Department of Health and Human Services - Healthcare.gov

Imagine the following - you've just finished filing the paperwork to get your business off the ground. The marketing section of your business plan says that you're going to establish a robust web presence. Your best friend has a "connection" with a web-developer and since you don't know the first thing about web development, you say "OK."

Nine weeks later, your new website still isn't ready, because it turns out that the "web-developer" was someone who had no real experience with development projects, tools or processes. What you didn't know hurt. You lost time, and how much money you wasted is still a sore point.

Moral of the story: Figure out what questions to ask to help you qualify providers and vendors as to whether they have the capabilities to deliver what your business needs.


Imagine that you've run an organization that has grown over 8 years from two people to more than 60 staff. The number of members you provide insurance coverage for has likewise grown from about 100 to more than 40,000.

The small company that designed your enrollment/claims processing/billing system has been with you almost from the beginning. The system started as a single user platform, but over time, you requested multi-user capability, and you also needed additional functionality. However, as the number of members has grown, the processing time has grown proportionately. System limits are affecting other operational areas.

A functional/operational audit makes it clear that the way the system was first designed will make it impossible to change. That vendor hasn't grown their resource base - they're very comfortable staying a small operation. But you feel loyal to a company that's been with you all the way to this point.

Moral of the story: It is possible to outgrow the capabilities of your providers and vendors. You need to ensure that they can keep up, and if they can't, develop plans to find companies that can handle your current stage of development.

It's 2013, and one of the most significant initiatives in U.S. history is getting ready to launch as the culmination of the 2010 Patient Protection and Affordable Care Act. On October 1, 2013 - the brand new Healthcare.gov website launches to much fanfare - and crashes. The official count from HHS indicates that fewer than 100 people were able to sign up the first official day of operations.

Being the federal government, you are able to marshal the resources of experts from around the country to essentially rebuild major system components in a matter of weeks. As those weeks go by, the system increasingly shows signs of life, until eventually the system works more or less as first intended.

It turns out that the major contractors hired by HHS to develop the system had a history of failed projects. (In fact, by some estimates, more than 40% of IT projects - that's all, not just federal - fail.)

Moral of the story: Just because you hire a government approved contractor doesn't mean that the contractor can actually deliver. Does the vendor have a provable track record in delivering projects of similar complexity and scope?


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