Tracking vendor incidents serves several key purposes when managing vendors:

• Ability to look for trends of the same incidents
• Holds the vendor accountable to contract terms
• Ensures the contract terms cover such incidents — if not, consider adding an amendment or addendum
• Negotiate better terms when reviewing incidents during contract renewal

Vendor incidents should be created at the time the incident was reported. The best way to track the incidents is by using a vendor software system.

Examples of Vendor Incidents

Vendor is not meeting SLA's

• Vendor agrees to have their system up and available for access 99.99% of the time during your hours of operation per month, yet they were down for 60 minutes.
• Vendor provides customer service but is not meeting its customer satisfaction scores, even by 1%.

Breach of contractual term or clause

• Vendor communicates confidential information regarding your contract terms to a competitor
• Vendor brings on a sub-contractor to provide services but the sub-contractor is not licensed
• Vendor changes a process that is critical to your operation

Incidents where there is not a contractual term or clause

• Vendor's representative is rude or unprofessional when providing customer service to your internal employees
• Vendor is downsizing its operation that supports your services

Where Can Vendor Incidents Come From?

There are multiple sources to obtain vendor incidents which is a company should have a process and system to track vendor incidents.

Sources for vendor incidents:

• Vendor scorecards
  Monitoring scorecards is one way to verify the vendor is meeting the contractual SLA's. Any SLA that is not met should be tracked as an incident.
• Business owner of the vendor
  When the business owner has identified an issue with the vendor they should always report this to the VMO to track and resolve.
• Vendor reviews
  Vendor reviews usually identify areas that the vendor can improve upon — any suggested improvements should be tracked as a vendor incident to monitor for resolution.
• Internal resources that interact with the vendor
  Internal employees that deal directly with the vendor will always be a good source to identify issues. No matter how petty the issue may be, the VMO should be the gate keeper for all vendor issues.
• Your customers
  Some vendor's may deal directly with your customer so for those customers and for services the customer is unsatisfied. The channel your company now has for that should feed vendor related issues to the VMO to track.
• Media
  The VMO should be tracking the media for alerts on their vendors. There are usually e-publications that you can subscribe to that are industry specific to help track your vendors.
• Vendor
  When vendors have incidents they should let their clients know. Reporting directly to the VMO to capture the incident is the most efficient.
• Vendor's competition
  The competition likes to talk — while most of their claims could be false, it is always important to vet their claims out with the vendor and other sources before assuming the claim is true.

You Have a Vendor Incident: What Do You Do?

The Vendor Management Office (VMO) should be responsible for maintaining and managing vendor incidents.

Track the incident in a centralized system

• Log the incident type
• Log the date and time of occurrence
• Obtain and log the vendor's action log of repair
• Log the resolution date and time
• Document if the incident is related to a contractual term

Validate if the incident is repetitive

• Review the incident log to validate if in fact the claim is a repetitive issue
• If repetitive, review the past resolution and meet with the vendor to determine to identify the root cause of the reoccurrence
• Have the vendor build a new action plan and review their proposed resolution

Review the incident with the business owner

• Alert the business owner of the incident
• Provide your findings and determine the course of action: (a) Action Plan, (b) put on notice or (c) terminate vendor

Review the incident with the vendor

• Advise the vendor of the incident and provide next steps for the vendor

Track the incident to ensure resolution

• If an Action Plan is needed manage the vendor to their Action Plan to resolve the incident. Make sure the Action Plan is SMART based and has specific timelines.

Document vendor incidents in next vendor review/contract negotiation

• During vendor performance reviews, internal vendor reviews and contract negotiations, all of the vendor's incidents from the last review/negotiation should be included.

Paul Boone is an experienced VMO manager. Connect with Paul on LinkedIn.