Over the past ten plus years I have worked with hundreds of organisations and spoken to many thousands of people working in procurement and contract management. One of the common issues raised but this community is the issue of a supplier not delivering or poor supplier performance. When I engage in such discussions and probe to find out what the issue is and why there is a seemingly widespread performance issue. What I often uncover is that the key problem is an expectation gap and largely not a supplier performance issue at all.
What is the expectation gap?
The expectation gap is the difference between what a customer or buyer perceives as the expected or desired standard of performance and what is specified in the contract. There is also an expectation gap that can exist between the specification and what the supplier believes they should be delivering. We will look at each in turn.
The customer expectation gap
When I speak to customer contract managers about supplier performance, they often speak about how “the supplier isn’t delivering what we expect or what we want”. When I probe this statement with them, and ask ‘is the supplier delivering against the contract’ the answer is often “yes, but…”. In essence the supplier is meeting what is specified, but the underlying issue stems from either the contract not clearly articulating what is actually required, or there is a mismatch between what the customer wants or needs and what is specified in the contract that the supplier must deliver.
Customers can end up in this situation as a result of a number of reasons.
Firstly, a poorly written or vague specification can often be produced by buyers who have not done sufficient market research or have limited knowledge or experience in the suppliers industry – this poor specification stems from the buyer just not knowing what they don’t know.
Sometimes the issue is a lack of time or resources to get the contract written, which results in a rush job or a lack of depth or detail on the specification.
Lastly, many buyers often indicate they want ‘flexibility’ as things will often change, so as such a vague or open specification is the result.
Regardless of the reasons the thought process and internal discussions about the goods or services needed have gone on for some time, often weeks or months, prior to the buyer approaching the market. This tacit knowledge exists in the customer contract manager or procurement officer’s mind and can at times be substantially different to what is documented in the specification. This mental model or internal benchmark is often used as the yard stick of comparison, and as such the supplier more often than not just doesn’t measure up to what is expected.
Supplier expectation gap
As I mentioned earlier, there is also a supplier expectation gap that exists. This is the gap between what is specified in the contract and what is expected or understood by the suppliers representative. This expectation often comes about from either a misunderstanding or a difference in interpretation as to what is specified in the contract.
What do we do about it?
The expectation gap can lead to perceptions of poor performance, can create a sense of mistrust and can lead to a souring of the supplier/customer relationship. If not addressed, this can lead to formal disputes and in severe cases lead to litigation.
We need to acknowledge and understand that the expectation gap exists and is often the root cause of perceptions of poor supplier performance. Ultimately we can only ask the supplier to deliver what is specified in the contract, as this is what we have agreed to pay them to do. The issue will come down to identifying where expectations diverge from what is specified in the contract, and then these gaps need to be managed and stakeholder expectations may need to be reset.
Do you have an expectation gap? Tell us what you think!
