6 Golden Rules of Supply Chain Contractor Management

Successful contractor management is critical for helping your business reduce supply chain costs while still meeting your targets and obligations to customers or clients. This is particularly true today amid rising energy costs, inflationary pressures and soaring raw material prices.

It’s no surprise, then, that diversifying and segmenting suppliers is one of nine key priorities identified by senior-level supply chain executives, according to a recent EY report.

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The bottom line? Investing time in developing strategic contracts upfront and ensuring all parties understand their obligations under your respective agreements helps protect your supply chain from disruption and uncertainty.

To achieve this, companies need to ensure they are properly managing their contractors. Here is a brief overview of six best practices for contractor management. 

1. Establish clear expectations

Before engaging with a contractor, it’s crucial to have clear expectations about the services that need to be provided and the timeframe in which they must be delivered. This will help ensure both parties understand what’s expected from them and are held accountable for meeting those expectations.

For instance, businesses in the construction industry can narrow down their pool of potential contractors by requiring them to be prequalified under schemes like SSIP, PAS 91 or the Common Assessment Standard.

2. Set up performance metrics 

Establishing performance metrics enables you to track your contractors’ performances against their contractual obligations and your project milestones. This will allow you to ensure their work meets quality standards.

3. Monitor performance regularly 

You should regularly monitor your contractors’ performances so that any issues can be identified quickly and addressed before they become too large or costly. This includes checking in with contractors regularly and conducting periodic reviews of their work, products or services.

4. Create communication protocols

Establishing effective communication protocols between yourself and your contractors will ensure everyone remains informed and up to date on progress towards meeting contract terms and deadlines. Scheduling regular meetings with stakeholders can also help foster collaboration between all the parties involved in the project or service delivery.

5. Provide feedback and support

Providing feedback and support to your contractors throughout their contracts will help ensure the successful completion of contracted services or projects and maintain positive relationships between both parties over time. By offering constructive criticism where needed, you can also encourage further improvement, leading to better performance going forward.

6. Review contracts periodically

You should periodically review contracts to determine if any changes need to be made due to external factors, such as new industry regulations or changes in customer requirements. This will help keep your contracts up to date and compliant with applicable laws or regulations, reducing risk for both yourself and your contractor partners.