Outsourcing: KPIs Determine Success with Vendors By focusing on six specific areas, managers can improve their chances of success
by: Andrew Gager, CMRP, CAMA
Part 1: Outsourcing: Effective Vendor Management Strategies
Part 2: Outsourcing: How To Select the ‘Right’ Vendor
Part 3: This page
Measuring vendor performance against KPIs is essential to outsourcing success. We’ve all heard the saying, “What gets measured gets done.” When it comes to vendor management, managers can use numerous KPIs to measure performance or service, from the cost of maintenance by internal or subcontractors to asset performance, asset reliability, quality and response time against SLAs. Among the KPIs managers should consider are these:
Customer service levels. The average response time measures the time between the moment a customer calls and when a technician responds to it. This KPI is crucial because response time is a common complaint among customers. Managers can use several KPIs, such as average response time, first call resolution, customer satisfaction, service level and complaints.
Backlog. This KPI measures maintenance tasks that are essential to repair or prevent equipment failures but that have not been completed yet, including preventive maintenance, predictive maintenance, corrective maintenance and inspections. Managers should measure backlogs in hours and convert the data to backlog weeks. A healthy total backlog is four-six weeks, and managers want two-four weeks of ready backlog.
Schedule compliance. This KPI measures the ability to schedule and complete work for customers on the date or time as promised.
Quality. Managers can employ several KPIs to measure quality. Mean time between failures (MTBF) can help managers validate the quality of the repair, while mean time between maintenance (MTBM) measures the time between maintenance activities.
Conflict is inevitable, but if managers do not address it properly, it can be bad for business, and it can negatively impact both parties involved. Managers need to resolve most conflicts in their earliest stages. Focusing on these issues can help managers avoid and resolve conflicts before they interfere with the relationship between the contractor and the department:
Communication. It is important to have a documented plan that establishes clear lines of communication covering the service provider working in the facility, the customer and facility occupants.
Complaints. Establish a process for resolving issues and complaints immediately. Issues involving facility-managed arrangements typically require an immediate response rather than relying on periodic performance reviews.
Reviews. Managers should revisit performance KPIs regularly.
When a manager has a well-defined scope of service requirement in place, qualitative and quantitative methodology to assist in selecting the right provider, the most appropriate type of contract, key performance indicators, policy and procedures established for communication and conflict resolution, the result is more likely to be a cost-effective and beneficial relationship between the in-house department and the services vendor.