The guide Overview

Manage supplier relationship

Develop a strong collaboration with your supplier throughout the delivery phase

Why it's important

Managing your relationships with suppliers is important at all stages of the procurement cycle, but particularly critical during the delivery phase.

Effective supplier relationship management helps:

  • develop mutual trust and understanding
  • drive continuous improvement, value for money and capture innovation
  • manage risk, for example in the supplier’s ability to carry out the work
  • deal with any unexpected events during delivery

What it means

Challenges to building trust and understanding can include:

  • using the contract to overcome problems rather than discussion
  • overuse of performance monitoring, leading to a lack of trust
  • misunderstandings relating to working culture or values
  • using rigid, ‘one-size-fits-all’ contracts that are not designed for technology projects
  • an over dependence on one supplier, leading to a deterioration in quality or a lack of innovation

To meet these challenges you should:

  • ensure that problems are resolved as early as possible, without involving the contract or legal teams
  • use contracts that allow for flexibility and adaptability in how outcomes are delivered
  • agree a code of conduct with the supplier at the start of the contract
  • use incentives to drive improvement in supplier performance
  • involve the supplier in drawing up product plans or ‘roadmaps’
  • allow the suppliers to propose how they will deliver their outcomes
  • allow the supplier to review the performance of your organisation
  • allow more than one supplier to work on larger projects, by breaking them into chunks or allowing suppliers to collaborate

You should only end a contract early with a supplier if there has been:

  • a serious breach of contract, for example if a supplier hasn’t done everything they said they would
  • consistent poor performance that hasn’t improved following an improvement plan

Do's and don'ts


  • resolve problems early through discussion and collaboration, not contract enforcement
  • allow the supplier to feed back and suggest improvements
  • consider involving the supplier in product strategy and planning sessions


  • do not end a contract early without following an improvement plan
  • do not become ‘locked in’ or over dependent on one supplier