In an effort to improve products and services from vendors, Ken Piddington, CIO of Global Partners LP, came up with a creative program that turns vendors into partners. The Strategic Partner Program offers benefits for both the supplier and the customer, Piddington says in an interview with Network World's John Dix.

When Piddington became CIO of the $8 billion energy firm, he noticed that the only time he interacted with suppliers was when there were problems or when they wanted to sell him something.

Many of the vendors had been working with Global Partners for many years, but they hadn't necessarily adapted as the company changed. 

We are "a different company today than we were three years ago, five years ago, 10 years ago, and we had many contracts that didn't fit our current business. So we needed to increase service levels, lower costs and get these guys to be more innovative and help Global find better solutions," he says.

After doing a lot of research on vendor management, Piddington put together a partnership plan and then ran it by analysts and peers. He talked with other IT leaders who had implemented similar projects, including one at Family Dollar Store, and was able to learn the pros and cons.

Piddington and his team categorized Global's vendors according to "how they play." They established five categories, beginning with Strategic Level 1 vendors that are critical to daily operations.

"Without them, we would have serious business impact. Our fuel terminals, for example, are our life blood, and the vendors that support the automation systems at those terminals are strategic. A Verizon in many worlds might be a commodity, but we have gotten heavily involved with them in support of these terminals, so we categorized them there. And Oracle Financials is another Strategic 1," he says.

Strategic Level 2 vendors are important to daily operations, but Global wouldn't go out of business if they were lost. After that are the vendors that fall in the Emerging category, then Legacy vendors and finally Tactical vendors. The majority of the suppliers fall into the Tactical level, providing commodity services or products. With these providers, the deal rests in the price, quality of service and relationship.

Piddington made sure there was a single dedicated manager for each vendor. "It will be this account manager's responsibility to bring in the right people at the right time so we would stop getting bombarded from six different people all trying to sell us a different slice of their pie. CA and Oracle are perfect examples of that. We now have them working under a single point of contact. The cold calls haven't stopped, but they have been reduced dramatically," he says.

The plan also includes an annual performance review for each vendor so Global could measure them.

What was somewhat surprising is that a number of vendors were excited about the plan despite being nervous about it. Piddington realized that the plan would have to benefit them as well if they were expected to participate meaningfully. One of the benefits is the quarterly Global Insight meeting, which gives vendors a clearer idea of what the company is doing.

For more:
- see John Dix's article at Network World

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