third parties
Selecting and managing third parties
We all need to use third parties at some point in business, but how do we first choose them and then ensure we are getting the most out of them?
by Alison Beech, business relationship director, Spicerhaart
The supplier/client relationship is an important one and selection and on-going assessment is critical to success. The mortgage industry relies on a number of external suppliers, such as asset managers, surveyors, IT, conveyancing, as well as the usual. Additionally, the industry has traditionally had distribution relationships with the intermediary market. Having moved from working in lending and making the decisions on the suppliers to the other side of the fence and now offering those services to lenders as well as being a client, I can see ways in which both lenders and suppliers can improve the decision making process and ongoing relationship for all those concerned.
SupplierSelection.com The internet has made it significantly easier for consumers to thoroughly research products, services and providers before committing to purchase. The travel and general insurance sectors have probably seen the most radical transformation of their distribution processes. The challenge for advisers specialising in those areas has been to identify customers who are ready to buy and to demonstrate that they, as a professional adviser, can add value to the customer’s decision-making process.
Can this approach equally apply to the corporate purchasing processes in the financial services industry? Inevitably, like consumer decision
making, the corporate purchasing process will involve comparison. One way to achieve this effectively is to engage a third party in large supply chain decision-making processes, such as a professional procurement team. This can be an internal team or be outsourced to an external provider. The procurement team can help you to acquire the appropriate services at the best possible price and to meet your specific needs in terms of quality and quantity, time, and location. Many lenders choose this route in order to promote fair and open competition for their business while minimising exposure to risk, as it is also the job of the procurement team to carry out the due diligence required to ensure a reputable, reliable and sustainable supplier is chosen. In order for the suppliers themselves to
add value to this decision-making process it is necessary to establish the drivers for decision makers. Price, quality and service are usually, of course, key factors for the purchaser, though their relative weighting will vary depending on the purchaser’s own business objectives. It is important to bear this in mind when pitching for new business and be able to demonstrate where your product or service stands against the competition for these three variables, and where the purchaser is on the cost, quality, service curve.
Key driverS and comparableS The cost of suppliers can be compared and established using similar methods to internet consumers, as purchasers can compare prices and even make a decision based on an eBay style reverse bidding process. The purchaser should offer a specific and detailed brief to all parties it is considering to ensure that proposals are easily comparable on a like for like basis. The quality of a supplier is far harder to
quantify in the decision making process, but can be measured by comparing specific factors such as general references from other existing clients, reputation and market intelligence, and credit referencing. Any previous relationship between the purchaser and supplier should be taken into consideration as an indicator of their ability to work together, which will impact largely on the quality of the service and the achievement of shared objectives. In addition, factors such as dispute and problem resolution should be analysed – it would be naïve to think that this will not occur, but knowing there is a system in place to deal with such problems can offer the purchaser and supplier reassurance. Word of mouth recommendations from industry peers and external supplier reputation in the wider marketplace can also greatly impact in determining the merits of one supplier over another. Getting to meet the people you’ll be dealing with rather than just those involved in the sales pitch is also key. People buy people at the end of the day and a clear
mortgage introducer SEPTEMBER 2010 33
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