The Twelve Supplier Capabilities

Feeny, Lacity, and Wilcocks (2005) have identified 12 key supplier capabilities that clients should take into account when looking for a vendor.

1. Leadership - as found by Feeny et al. the main differentiating factor between success and failure was the individual leading the supplier teams. Failures resulted from firstly focusing too much on business issues. Second, from bad relations between leaders of the suppliers and either/or/both the clients teams and and the top management for the suppliers organization.
2. Business management - Suppliers should avoid situations where they are being exploited by their clients or dependent on one client. They become too closely tied together as the worse your clients business gets, the worse your business gets.
3. Domain expertise - The ability to retain and apply professional knowledge; this can be done by moving procurement people to a clients site to acquire new knowledge.
4. Behavior management - The ability to motivate and inspire people to deliver services of high value. Once again this can be done by transferring employees onto client sites to go through a "harmonization" process
5. Sourcing - The ability to access necessary resources, for example by generating economies of scale, using superior infrastructure, or enhancing procurement practices.
6. Process improvement - The capability to change processes in a way that generates a dramatic improvement. Methods include using supplier track records, six sigma methodologies, or other quality control measure such as CMM.
7. Technology exploitation - This is considered one of the key capabilities for BPO.
8. Program management - Ability to manage, prioritize, coordinate, and mobilize at both the individual project level and for a set of inter-related projects. 
9. Customer development - As a supplier you want an educated customer, so that they can make informed decisions. This can be done through consistent personal contact and cooperation.
10. Planning and contracting - Being capable of planning resources in a way that creates a "win-win" situation for both the supplier and customer.
11. Organizational design - The capability required to design and implement successful organisation arrangements. According to Feeny et al. (2005) it takes approximately 2 years to reach an organizational fit between client and supplier.
12. Governance - Key issues include ensuring that contracts are in place and that decision making is visible and accountable.

The 12 capabilities can be categorized into three key competencies:

1. Delivery competency - The suppliers ability to respond to the customer's ongoing needs.
2. Transformation competency - The suppliers ability to deliver radically improved service in terms of quality and cost.
3. Relationship competency - The suppliers willingness and ability to align its business model to the values, goal, and needs of the customer.