Vendor Accountability and Performance Metrics

Most vendor failures don’t happen at onboarding. They happen in the quiet months when no one is looking. A supplier who passed every check in January could be insolvent by March. A “secure” IT partner today could suffer a breach tomorrow. And if your process only checks once a year, you will not know until it is too late. That is why continuous compliance is becoming the new standard. It means tracking a vendor’s financial, cyber, and reputational health in real time — all year, every year. Here is a 5 step framework you can apply now: 1️⃣ Define your critical vendor health indicators → financial stability, cyber posture, compliance status 2️⃣ Embed these checks into onboarding workflows 3️⃣ Automate ongoing screening for: → OFAC lists and regulatory watchlists → Company registry changes → Adverse media alerts 4️⃣ Monitor spend for unusual patterns or spikes 5️⃣ Review performance and risk status quarterly with stakeholders I have built this two pager so you can drop this straight into your own process or improve your current processes. Save this post and comment COMPLY if you want it.

Scope 3 Decarbonization 🌎 Reducing Scope 3 emissions is one of the most complex challenges for companies committed to net-zero. Procurement sits at the center of this challenge, particularly in Category 1, where supplier-related emissions dominate. Deloitte has developed a structured 5-Step Framework to support organizations in addressing this issue. The framework begins with assessing the baseline, ensuring that GHG emissions are measured consistently, suppliers are segmented, and priority categories are identified. Once a baseline is established, the next step is to set goals, strategies, and investments. This involves breaking down high-level commitments into supplier-level actions, building internal capabilities, and prioritizing initiatives through defined criteria. The third step is evaluating initiatives and developing a roadmap. Here, companies score potential actions against cost-benefit and risk considerations, define abatement strategies, and prepare a structured implementation plan. Execution follows, where procurement teams engage suppliers directly through kick-off sessions, contract terms, and ongoing support. Supplier education, policies, and resources are critical for alignment and long-term collaboration. The final step is monitoring and managing progress. This requires internal and external scorecards, performance metrics, and ongoing reviews to ensure targets are being met and corrective actions are taken where necessary. Complementing this framework, Deloitte developed the Supplier Collaboration Matrix, which acknowledges that supplier relationships vary. The matrix provides four approaches based on whether companies collaborate or delegate responsibility, and whether they incentivize or enforce compliance. In the collaborative and enforced approach, suppliers are compelled to align on reduction goals through mandatory plans, reporting requirements, and industry working groups. This ensures standardization across a supply base. In the collaborative and incentivized approach, companies partner with strategic suppliers, sharing costs and coordinating efforts across the value chain to accelerate emissions reductions. For delegated and enforced approaches, companies set strict targets and include them in contractual terms, with penalties for non-compliance and monitoring mechanisms to track supplier performance. Finally, the delegated and incentivized approach rewards suppliers that demonstrate strong sustainability practices, often by increasing spend with responsible partners or sourcing new ones that align with company goals. Taken together, these frameworks provide procurement leaders with practical guidance to move from broad sustainability commitments to measurable actions across their supply base. Source: Deloitte #sustainability #business #sustainable #esg

Cost savings is NOT procurement’s biggest lever anymore. Supplier segmentation by risk exposure. Executive-level QBR scorecards tied to EBIT impact. That’s the shift from cost-cutting to value creation. While everyone negotiates unit price and pushes payment terms, top-performing procurement teams quietly build supplier ecosystems that protect revenue. The Technical Breakdown: In other words… what nobody’s told you yet. 8% cost reduction → 22% supplier performance improvement → Fewer production disruptions and faster time-to-market. Supplier risk mapping → Dual-sourcing critical components → Revenue continuity when others are scrambling. ISO-aligned quality metrics → Contractual performance clauses → Measurable accountability (not “relationship talk”). Over a decade in procurement taught me one thing: → The companies that win treat suppliers like strategic assets, not expenses. One global manufacturer I worked with turned single-source dependency into a co-innovation partnership. Bottom Line → Procurement isn’t a cost center → It’s a risk shield → It’s a growth driver → It’s a competitive advantage when done right. Everyone else is negotiating harder. Strategic leaders are architecting smarter supply networks. Your Turn: Are you still measuring supplier success by price variance… or by business impact?

Your vendors are bleeding you dry—not money, time. After managing 100+ vendor relationships across Microsoft, Instacart, and our portfolio companies, I built a system that cuts project timelines by 70%. The problem: You think hiring experts means abdicating responsibility. Wrong. Your vendors manage 50 other clients. You're not their priority unless you make yourself one. Four Frameworks That Actually Work: 1. Deconstruct Your Blockers Don't ask "what's the update?" Ask "what specific approval are we waiting for?" Financial? Technical? Legal? You can't fix what you can't name. I've seen 6-week delays resolved in one call once we identified the actual blocker. 2. Own the Project Management Your vendors are specialists, not coordinators. Schedule the calls. Create the docs. Connect the dots. Yes, you're doing their job. It's also the highest-leverage work you can do. 3. Demand Time Boxes "We're working on it" = infinite timeline "Engineering review takes 5-7 days" = accountability Even vague deadlines beat no deadlines. One portfolio company cut deployment cycles 60% just by requiring time estimates. 4. Confidence ≠ Commitment "We're confident about approval" isn't "It's approved." Push for binary answers. This distinction alone prevents countless surprises. The Process: Monday: Status email to all parties Wednesday: 15-min sync if blocked Friday: Document decisions + next actions Rule: Never let a week pass without documented progress Real Results: Applied this to 6 portfolio companies last quarter: Project completion: 12 weeks → 4 weeks Cost overruns: Down 40% Vendor performance: Up 70% Best part? Our vendors started using our process with other clients. Advanced Play: Create quarterly vendor scorecards. Measure response time, timeline accuracy, and technical competence. Share transparently. Performance improves within one quarter. Why This Matters: Every week of delay costs runway. Every vendor inefficiency is a competitor's opportunity. The companies that scale aren't the ones with the best vendors—they're the ones who best manage them. Your Move: Pick your worst vendor relationship. Apply one framework this week. Document what changes. Vendor management isn't sexy, but neither is running out of runway because every project takes 3x longer than it should. What vendor challenges are you facing? Share what's worked (or hasn't) below. — Enjoy this? ♻️ Repost it to your network and follow Kevin Henrikson for more. Weekly frameworks on AI, startups, leadership, and scaling. Join 2000+ subscribers today: https://lnkd.in/gstGkhJF

I track carrier performance with more than a dozen metrics—down to the decimal point. On-time performance. Tender acceptance. Fallout. Recovery time. Consistency... When performance slips, carriers hear about it. And when performance is exceptional, I double down on those relationships. That part is standard. What isn’t standard is what I ask next. In those same conversations, I’ve asked many carriers to scorecard me. Tell me: - Which of my operational behaviors cost you margin - Where my processes introduce friction or waste - What we do that makes your job harder to execute profitably Hold me accountable to those metrics. And every time? Crickets. I get the hesitation. Most shippers don’t invite that level of transparency. And pushing back on a customer can feel risky BUT a partnership built on one-way accountability isn’t a partnership. If carriers want to escape price-only conversations, this is part of the path: - Define the metrics that matter to you - Quantify where shipper behavior erodes margin - Bring those insights into the QBR—not as complaints, but as data Mutual accountability doesn’t weaken relationships. It’s usually the first sign that one is actually real.

If a vendor asks you to pay before your users even touch the tool, you’re not buying software - you’re buying a demo. Why Procurement Should Stop Paying for Promises - And Start Paying for Proof After three decades in procurement and multiple IT transformations, I keep seeing the same pattern: dazzling demos, big upfront licenses, flat adoption. We reward vendors for selling the dream, not delivering the value. It’s time to flip the model to adoption and outcomes - with real skin in the game. The upside of outcome/adoption pricing - Aligns incentives - vendors earn more only when users actually use the tool or outcomes improve - Cuts shelfware - you stop funding unused seats - Focuses everyone on enablement and UX - because adoption drives revenue The trade-offs to manage - Metric design risk - define “active user” and “value realized” clearly - Budget variability - set caps and true-ups for usage swings - Behavior gaming - make metrics auditable and quality-checked Leading examples - Adoption based: Slack fair billing for active users, HubSpot marketing contacts you actually market to - Outcome based: Intercom and Zendesk pricing per automated resolution - Consumption based: Snowflake pay-for-use, Datadog usage metering - Risk sharing: Security vendors offering monetary warranties - Services pattern: Gain-share tied to realized savings How to make it work - Co-define 3 to 5 success metrics - adoption, time-to-first-value, cycle-time reduction, automated resolutions, CSAT - Price in phases - smaller base fee for pilot + bonus or malus vs adoption thresholds, then scale to outcome units with spend caps - Write it down - clear metric definitions, exclusions, dashboards, SLAs and XLAs, credits or rebates if ramps are missed Call to action - Let’s stop paying for slideware. - Negotiate price against a value ledger - adoption, outcomes, satisfaction. - If a tool delivers, vendors will get paid more, and they should welcome that.

1. Rethink the Vendor Relationship: Leadership Cannot Be Outsourced While many assumed AMH’s revenue cycle issues stemmed from outsourcing billing, the real issue was a lack of ownership and strategic alignment with the vendor. AMH shifted the dynamic by establishing internal leadership, defining a shared vision, and setting expectations. Regular, structured meetings and collaborative performance reviews turned the vendor from a passive service provider into an accountable partner. Ask yourself: Is your billing vendor driving your strategy, or are they executing yours? 2. Appoint a Financially Fluent Internal Champion A turning point for AMH was identifying an in-house leader with deep knowledge of billing operations—someone who worked alongside the CEO to track performance and enforce accountability. This role acted as the bridge between executive leadership and daily revenue cycle operations, ensuring nothing fell through the cracks. Leadership tip: Every FQHC needs a revenue cycle advocate in-house who can translate financial data into operational decisions. 3. Define and Monitor Key Performance Indicators (KPIs) Relentlessly Before the intervention, AMH’s Days in Accounts Receivable (A/R) stood at 125—a serious cash flow red flag. By implementing a focused KPI strategy, they reduced A/R to 40 days in just 9 months and sustained that performance. More impressively, monthly collections grew from $400K to $1M, demonstrating that targeted, data-driven strategies yield tangible financial returns. Key insight: What gets measured, gets managed—and what gets managed, improves. 4. Don’t Just Collect Data—Use It to Drive Change Analyzing billing data in real-time enabled AMH to identify payer trends, spot bottlenecks, and optimize workflows. Setting measurable metrics is only part of the equation; acting on the insights is what drives outcomes. Ask yourself: Are your data dashboards guiding daily decision-making—or are they just reports you file away?

Dear IT Auditors, Vendor and supply chain risk in IT and AI Your risk posture extends beyond your walls. Vendors build, host, process, and influence critical systems. AI intensifies this exposure. Your audit shows leaders where trust depends on third parties they do not control. You focus on accountability, visibility, and oversight. 📌 Identify critical vendors You inventory vendors supporting core systems, data processing, and AI models. You rank them by business impact. You focus on providers tied to revenue, regulated data, or decision-making systems. 📌 Assess onboarding due diligence You review risk assessments performed before engagement. You confirm security, privacy, and compliance reviews occurred. You flag vendors approved with incomplete evaluations. 📌 Review contract and SLA terms You test if contracts define security responsibilities. You confirm audit rights, incident notification timelines, and data ownership clauses. You highlight vague language that weakens enforcement. 📌 Validate ongoing monitoring You check if vendor risk is reassessed regularly. You review SOC reports, certifications, and performance metrics. You identify vendors with no follow-up after onboarding. 📌 Test access and integration controls You review how vendors connect to internal systems. You confirm least privilege access. You test offboarding procedures. You flag orphaned connections and shared credentials. 📌 Evaluate AI-specific vendor risk You assess reliance on third-party models, APIs, and training data. You review transparency around model behavior. You identify blind trust in black-box services. 📌 Inspect incident response coordination You test how vendors report incidents. You review escalation paths. You confirm joint response procedures exist. You flag delays or unclear ownership. 📌 Trace recent issues to vendor control gaps You review past incidents or audit findings. You link failures to vendor oversight. You show leadership where dependency creates risk concentration. 📌 Close with risk ownership clarity You show leaders who owns vendor risk internally. You recommend governance improvements. You help leadership regain control of the supply chain. #VendorRisk #ThirdPartyRisk #ITAudit #AIAudit #InternalAudit #GRC #CybersecurityAudit #SupplyChainRisk #RiskManagement #TechLeadership #DataGovernance #CyberVerge

𝗔𝗺𝗮𝘇𝗼𝗻 𝟭𝗣 𝗩𝗲𝗻𝗱𝗼𝗿𝘀: Is Shipped COGS still your best metric? For years, Shipped COGS has been the standard KPI for vendors measuring performance on Amazon. It’s because of a few things: simple, familiar, and easy to pull but it doesn’t tell the full story anymore. With Amazon now offering expanded visibility into metrics like:  • Sales Discounts  • Contra COGS  • Damage Allowances & Co-Op Deductions Don't settle with reduced data to back your decisions. There's two paths forward:  • 𝗦𝘁𝗶𝗰𝗸 𝘄𝗶𝘁𝗵 𝗦𝗵𝗶𝗽𝗽𝗲𝗱 𝗖𝗢𝗚𝗦: Easy to use, but it ignores the true cost of doing business on Amazon.  • 𝗨𝘀𝗲 "𝗡𝗲𝘁 𝗖𝗢𝗚𝗦": A more complete picture of your bottom line: Net COGS = Shipped COGS – Sales Discounts – Contra COGS This metric isn’t available natively in Vendor Central but it’s straightforward to calculate, and it gives you far more transparency into your real revenue. If you’re a 1P Vendor looking to manage profitability, Net COGS should be your new north star.