We have been fortunate to have worked with many different insurers, financial services companies and suppliers over the years. This has given a good overview of different ways of managing a supply chain and how to get the best out of your suppliers.
Trust
This is not as straightforward as it might be. Obviously there needs to be trust between the vendor and the supplier but this cannot be and should not be unconditional. The best methods I have seen are audit regimes which validate the good and inconvenience the bad performers. Like any sports coach will tell you, if you let a poor performer “get away with it”, it will soon have an adverse effect on the rest.
We implemented an audit regime whereby the best performer had their next audit date set for 2 years time and the worse performer 5 days time which seemed to have the desired impact.
Comparing performance
Many years ago my team and I were waiting in a supermarkets head office for a meeting. It goes without saying that we were being kept waiting. In the foyer were two white boards on either side of the main passage. One was labelled “Super Hero Suppliers” and had a list of 10 companies listed beneath, the other was labelled “Super Villain Suppliers” with another set of 10 companies listed. With thousands of visitors each week I can only imagine that any CEO for the Super Villain Suppliers would have tasked his teams to get them off that list.
Rewarding Performance
At a large commercial insurer we had a dual panel of loss adjusters. At the start of the contract, each firm received 50% of the available instructions. After 6 months, through a combination of file audit and data evidence, we would then allocate the better performer 60% of instructions and the other 40%. After a further 6 months, the process started again so that the 40% firm had a chance of getting the lions share and the 60% firm had a chance of retaining it.
By being crystal clear with the targets and desired outcomes, we were able to manage the panel to incredibly high standards. Oh and we also announced the results to both firms, in the same room at the same time, with the winner having to buy lunch for all.
Encouraging Innovation
The best example of this I have seen is with a major UK general insurer who had a very large advertising budget. The premise was actually very simple – come to us with a great idea which we can market and it might appear on our next advertising campaign.
This was not an empty promise, and working with their service providers there were campaigns which both featured, and relied upon, the suppliers idea and delivery.
Collaboration
If you type “Supplier Collaboration” into Bard or Chat GPT you’ll get a big self written article about the Toyota academy, or Amazon’s just in time process, or even Apple’s sourcing of components. I’ve never witnessed any of this first hand, but the examples I’ve seen all follow the same principles.
One insurer I worked for had a quarterly advisory group whereby the 12 best performing repairers were invited to a strategic thinking day to help us plan our future modelling. As part of this “select club” the repairers were also able to gain funding should it be warranted.
At another we had an arrangement whereby the suppliers claims handlers were “loaned” to us for a number of weeks to assist with workloads and also to gain a better insight into how we worked. This soon morphed into a transplant arrangement whereby their staff would sit within the claims teams on a permanent basis.
Conversely we also had arrangements with key strategic suppliers that our operational and management staff would be permanently based on their site. This was not to provide micro management but rather to evolve and improve the processes on a day by day basis.
Celebration
Most insurers now have supplier days, but there are some who also have supplier awards ceremonies. These are always very well received by the supply chain providers, especially those who win and the insurer that hosts a treasure hunt as part of the days event is spoken of highly.
