Client–Vendor Relationship Management in Global Sourcing

Relationship management (RM) is a systematic process for coordinating critical business interactions between client and vendor to increase trust and inter-dependence and add value to the engagement. Many cite relationship management as the key for success in a global sourcing engagement. When RM is done well, experience indicates that both the client and the provider benefit: (a) the product or service is high quality; (b) the project stays within or close to budget, time and quality; and (c) the parties are left with a positive experience that can lay the foundation for future work. Successful RM is based on a strong overall organizational strategy for global sourcing. The management and governance plan for a specific engagement plants the seeds for the relationship management. A well-designed, explicit plan for RM is critical. As globalization and diffused networks of people and companies have come together through both formal and informal mechanisms, relationship management challenges have grown beyond the skills of managers (that draw upon traditional education and training models). RM was complex when organizations were coordinating in-house relationships. The complexity of external relationships, corporate cultural differences, geographical and time differences, country cultural differences, legal system differences, have increased the difficulty of RM beyond the experience of most managers. The purpose of this chapter is to describe and discuss the many variations and complex manifestations of RM in the context of global sourcing. RM is positioned on the Strategic Sourcing Life cycle Roadmap: beginning in Phase 5 of Transition and continuing through Phase 6 that focuses on ongoing management and governance. Specific topics covered in this chapter include: (a) defining RM in the context of global sourcing; (b) articulating foundations of RM such as trust, commitment and open, honest communications; and (c) understanding “virtual distance” and how this has an impact on RM in terms of creating a relationship map; and (d) unique aspects of RM when managing multi-country; multi-cultural and, sometimes, multi-provider teams; and creating strategies for RM.