managing supplier networks

Managing Supplier Networks 1

Managing Supplier Networks Best practices for managing your network of suppliers and trading partners


Introduction

Insurers spend billions each year on body shops, contractors, attorneys and

other suppliers in delivering the claims promise.

Most companies spend far more on these suppliers than they do their own employees, yet

while insurers have sophisticated systems for managing their employees… yet they have

nothing for managing their supplier networks.

Leading edge companies are starting to come to this realization and are implementing systems

to manage their suppliers that are equal to those they have for their employees.

Suppliers often represent the face of the company to the customer

Body shops

Contractors

Attorneys

Independent Adjusters

Managing networks of suppliers requires specialized tools designed to provide

Control

Transparency

Efficiency

Leading edge companies manage suppliers just as they do their own employees

Rigorous selection processes

Clear goals and objectives

Best Practices

Structured training

Performance audits

Feedback / Performance Reviews

Maximizing supplier networks empowers insurers to drive performance

improvements throughout the claims organization to improve service, control

expenses and achieve strategic objectives.


Industry Challenge: Managing Supplier Networks

Insurance companies subject prospective employees to a rigorous process of application, interviews and testing to ensure a good fit for the job and the culture of the company. Yet… contractors, body shops, lawyers and other suppliers are routinely hired from an internet search site. No application, no interview, no skills assessment. The Insurance industry has long relied on networks of suppliers to fulfill the insurance contract. Direct Repair programs have been in existence for years. Networks of IA’s, lawyers, nurses, and contractors are a staple in almost every insurance company. Yet, most insurance companies rely on little more than a spreadsheet to manage the network. Research shows that many carriers rely on local lists that are poorly communicated and often out of date. The process for adding suppliers to the list are poorly defined and often ignored by local staff. Examples abound of adjusters routinely using contractors, body shops or IA’s that had previously been terminated for fraud or misrepresentation, simply because there are no controls in place to prevent it. Given the significant advances in technology for managing employees, a surprising number of companies, including some of the industry’s largest, rely on nothing more than spreadsheets on a shared drive to keep track of some of their most important trading partners.

Face of the Company While insurers spend millions on advertising and protecting their brand, suppliers very often end up being the face of the insurance company. With centralized call centers and remote claims handling having long become the norm in the insurance industry, the only face many insurance customers will ever see is that of the body shop manager, the contractor, or the attorney that services their local territory. Industry surveys show that the insurance company’s claims satisfaction score is often tied to the rental car, body shop or contractor that delivers the repair. In spite of these facts, many insurance companies have limited control over which vendors are selected to represent the company. Often times, the selection process is nothing more than one adjuster’s opinion of someone they worked with in the past. At a time when insurance advertising and brand positioning has never been more important, the ‘face of the company’ is often a poorly vetted supplier that has little to no training on the brand they inadvertently represent.


Optimizing Your Supplier Network to Achieve Company Objectives Every executive knows the challenges of trying to drive change through a large organization. Getting your own employees to accept change is hard enough… getting suppliers who are barely connected to your company to support your goals can be nearly impossible. Since supplier networks are often the face of the company to the policy holder and have a direct bearing on the bottom line, it is clear that to fully achieve company goals and objectives, suppliers must be part of the solution. Communicating the message through hundreds or thousands of employees can be a time consuming and repetitive process. Yet, with a clear message, clear objectives and the right controls in place, companies can achieve significant operational and financial improvements through well managed projects. Driving significant change requires coordination and communication with both employees and suppliers.

Control, Transparency, Efficiency

You can’t drive process or operational improvements through a disorganized crowd of vendors and suppliers. Many companies, in fact, never even include their suppliers in their project plans when trying to develop and implement strategic projects. They believe that it is either impossible or too hard to leverage this considerable resource as part of the solution. Yet, many suppliers often share frustration that they are out of the loop and don’t get a chance to be ‘part of the solution’. With the right tools, supplier networks can and should be part of strategic plans.

Control

Well managed supplier networks begin with controls designed to manage the Selection, Approval and On-board process. Just like hiring employees, you need prospective suppliers to submit an application that outlines their skills, abilities, qualifications and certifications. A structured review and approval process ensures that only qualified candidates get to be the ‘face’ of the company.

Transparency

Leading edge network management programs communicate with suppliers much like they do employees. Suppliers know the companies objectives, they are familiar with best practices and they are trained how to provide superior customer service. All suppliers are not created equal… not every lawyer is experienced in the same kinds of cases… not every contractor can handle a total house fire or mold remediation. Your


employees need to be able to find the right supplier for the right job. You need tools that provide transparency about the supplier’s skills, abilities and qualifications.

Efficiency

The more you can rely on your suppliers, the less you need to rely on employees. The body shop is going to fix the car anyways… why not have them manage the process as well. The Insurance industry has a great deal of redundant inefficiency attributable to the insurance company and the supplier both doing the same thing. This was necessary when insurers had no technology or controls in place to manage the repair process and the supplier relationship. With the right tools and the right processes in place, insurers can manage, audit and monitor supplier performance much as they do their own employees, with the same risk / reward system in place for compensating and rewarding top performers.

Key Concept

A supplier network can work exactly like an employee network. Provided the same access to training and best practices, companies can drive opera-tional and process improvement projects out to their supplier network with the poten-tial to achieve greater overall results than when working only through their employees. With the right tools in place, companies can implement controls, maintain transparency in the process and supplier performance and gain significant efficiency in the process.


Building a Supplier Network Program

Building a true supplier network program takes more than compiling a list of suppliers. It takes

thoughtful analysis of business objectives, opportunities and needs. Listed below are the 12

steps to building a highly effective Supplier Network Program.

Step 1: Needs Assessment

What kind of network are you trying to build? Body Shop DRP, Contractor Network, Approved

Trial Lawyers, Nurse Case Management, etc. Insurance companies have a wide range of needs

that are met by supplier networks. It is best to build one at a time and develop a project plan

for the network.

Questions to be addressed in the project plan include:

Network Type: What kind of network is it? Objectives: What are the key objectives of the network?

Key Performance Indicators: How will you measure network performance?

Program Requirements: What criteria will you use to judge potential candidates? Required Skills / Capabilities: What are the minimum requirements?

Step 2: Selection Process

Just like hiring employees, top companies approach vendor selection just like an interview process. Suppliers must complete an application that is reviewed and assessed for skills and capabilities. Issues to consider in the selection process include: Location: Do you need a supplier in this location? Facilities: Are their facilities professional and represent your company’s brand? Ownership: Is this a reliable company that will be there when you need them?

Skills: What skills / capabilities does this supplier provide? Equipment: Does this supplier have the equipment to provide quality repairs? Training: Is this supplier current on the latest industry training?

Certifications: Are the certifications pertinent, meaningful, and current? Insurance: In the event of a problem, is the supplier insured? Rates & Services: What is their pricing and services?


Step 3: Approval

What is the process for approving a prospective candidate? If they appear to be a good fit, what are the steps for approval and on-boarding? Key issues to consider in the approval process are:

Approval Levels: Who needs to do approvals? Background checks: Are background checks required? Who will perform them? Legal Approval: Does your company require the Legal department to approve? Final Approval: Does your company require a VP to sign off on approvals?

Step 4: Contracting

Do you want a formal contract? Do you simply appoint the supplier as an authorized trading partner or do you have the supplier sign a legal contract stipulating the terms and conditions of your relationship? The majority of companies today require a legal contract that is signed by both the insurance company and the supplier. This ensures that roles and responsibilities are well defined and addresses issues such hold harmless agreements, rates, certifications, and other requirements to be part of the program. Issues to consider in the contracting process:

Terms and Conditions: What contract terms will you use, who will author them? Contract Duration: Will you use an open ended contract or will it have a defined term? Contract Delivery: How will you deliver the contract to the supplier? Signature: Will you use an electronic signature or manage storing paper contracts? Contract Changes: How will you manage rate changes / approvals going forward?

Step 5: Best Practices

Best of breed supplier networks have formalized SOP’s and Best Practices for their supplier networks. These are clearly spelled out and available at all times to the suppliers for reference so they can perform at their best.

Best Practices: Who will author the best practices? Delivery: How will the supplier receive the best practices documentation? Change Management: How will you ensure changes are current and received?


Step 6: Training & Testing

Just writing best practices does nothing to ensure they will be effective. You need to provide your suppliers with effective training and require successful completion of tests on your policies, procedures and best practices.

Training Content: Who will author training content? Training Delivery: How will you deliver training to the supplier network? Testing: How will you administer testing? Change Management: How will you notify the supplier network of changes and ensure they

are received and necessary testing completed?

Step 7: Communication

Effectively managing a supplier network and optimizing them to achieve company objectives requires the same level of communication you have with your own employees. Effective communication with a network of hundreds or thousands of suppliers can be challenging. You need to develop a communication plan to manage routine announcements such as changes in program management, quarterly results, and other issues pertaining to the supplier network.

Communication Channel: How will you communicate to your network? Distribution Lists: How do you keep your distribution list current? Branding: How do you ensure your message perpetuates your company’s brand?

Step 8: Workflows

A supplier network accomplishes nothing if you don’t have some means of communicating new assignments and documentation to your network.

Network Locator: How will you locate the right supplier for the job? Self Service: Can your customers locate the supplier themselves from your website? Assignment: How do you send assignments to your network? Current List: How do you ensure you don’t send work to terminated suppliers? Supplier Performance: How do you ensure the best suppliers are getting the work they

deserve?


Step 9: Compliance

Even the best laid plans will lose their value without a proactive plan to ensure compliance. Top companies have active and effective audit programs to ensure suppliers meet their obligations. It has been demonstrated time and again that with a well managed audit program, suppliers can take on much of the workflows they support with excellent results. Issues to consider:

Audit Tool: How will you perform audits and aggregate results? Reporting: How will you share audit results with the suppliers?

Step 10: Performance Feedback / Survey

Just as employees want to hear feedback from their manager, Suppliers want feedback from the insurance company. This is best achieved by gathering input from employees who work with the supplier and from customers who use the supplier’s services. Web and phone based surveys are an effective technique for gathering the voice of the customer relative to your supplier’s performance Issues to consider:

Data Gathering: How will you gather feedback from customers and/or employees? Reporting: How will you share feedback with the suppliers and your staff? Ranking: Will you use survey data to rank / rate employees?

Step 11: Scoring & Ranking

From elementary school on, we are all familiar with getting a report card; a periodic assessment of our performance and feedback on how to make it better. A critical step in developing a Supplier Management program is a Scorecard that can be shared with suppliers on a regular basis that provides an objective scoring of their performance based on all the variables in the program. Issues to consider:

Data Collection: How will you gather and aggregate all the data related to a supplier? Scoring: How will you score supplier performance? Delivery: How will you deliver the scorecard to network participants? Ranking: How will your suppliers know where they rank relative to other suppliers?


Step 12: Performance Management

Reward your top performers… performance manage your poor performers. That’s a basic tenet of management. Provide your top performers with the opportunity for more work and let your poor performers go to be on your competitors program.

Leverage the Data: How can you use this data to drive your locator / workflows? Action Plans: How can you drive performance changes through action plans? Performance Reviews: How will you deliver performance reviews to your suppliers? Success: How will you measure the success of your program against company goals?

Summary


The PerformanceGateway Solution

PerformanceGateway was designed and built specifically to meet the needs of managing supplier networks.

A Menu of Choices

Not every program is the same and not every insurance company has the same needs. PerformanceGateway offers a menu of tools and features that insurance companies can choose from to build a supplier network program that meets their business needs. The following is a high level overview of the many options and choices available through the PerformanceGateway platform.

Build Your Network

Supplier Database: An online supplier database is the heart of PerformanceGateway. Our web based ‘software as a service’ solution allows you to manage your network from anywhere ensuring that you always know which suppliers are in… or out of your network.

Supplier Profile: Each supplier is invited to log into PerformanceGateway to complete an on-line profile that serves as an ‘application’ to join the network. Profiles can be configured / customized to ask any question you want to ask and can be used to upload documents, certificates of insurance, etc.

Notifications: The PerformanceGateway system uses a powerful notification engine to remind shops to complete their profile, update expiring certifications, or any other kind of task or action plan you need.


Approvals: Configure your approval process to meet your needs. If you need 4 levels of approval… no problem. Automated notifications let the next person in the process know when there is an approval waiting.

Contracting: Our integrated electronic contract and e-signature process allows you to implement a full feature contracting process that will pass muster with your legal department. The ‘contract generation’ tool will produce a contract PDF anytime there is a contract change or renewal.

Instill Best Practices

Best Practices: Publish your best practices in an on-line repository that is already in use by thousands of body shops and contractors throughout the United States and Europe.

Training: Keep your training up to date and readily available to your suppliers. Our powerful on-line tool allows you to publish web based training in real time without the need for a developer. Publish text, images and video or Word, Excel or PDF’s. The choice is yours.

Testing: There is a reason schools have been testing for thousands of years… it works. The same is true for training and best practices. Suppliers need to know your program and they need to demonstrate understanding. The integrated test tool allows you got know which suppliers have completed the test and which ones still have work to do.

Communicate

Network Communication: “The only constant is change”…and that is true for insurance companies and supplier networks. People get promoted; new managers take over the program. Shops get bought and sold. The network you build today will be different next year. Keeping track of potentially thousands of suppliers and communicating program changes can be a daunting task. Our integrated Communication Manager allows you to communicate with your network quickly and efficiently.

Manage Workflows

Network Maps: Our powerful Network Maps & Locators allow you to quickly locate the right supplier for the job. We have a variety of mapping and locator tools to serve different needs.


Claims Assignment: Once you have picked the right supplier, send them the assignment so they can get started. Our claims assignment engine allows you to send the assignment including notes and attachments to give the supplier the complete picture. They can upload estimates, photos, attachments and notes to complete the process. Integrated auditing and rules engines enable you to streamline work-flows, reduce cycle times and improve customer service.

Ensure Compliance

Audit: The PerformanceGateway Audit tool allows you to audit everything from claim files to estimate reviews. Create audit templates for any kind of auditing need. Whether it’s an ad hoc audit for a DOI request or a quar-terly file review, the audit tool will meet your need.

Action Plans: Don’t just gather data… do something with it. With integrated action plans, audit templates can be configured to send pre-defined tasks and action plans to suppliers when their audits show need for improvement.

Gather Feedback

Survey Tool: Our powerful surveying capabilities allow you to gather data on your net-work participants either from your own staff or from your customers. Surveys can take any form from a 5 Star rating to a 10 point Net Promoter Score. Comments can be categorized to provide actionable outcomes.

Survey Rankings: Survey data can be integrated into the network map, network locator or scorecard to display survey data where and when you need it. Combined with Action Plans, Scorecard and Communication Manager, you can drive behavioral changes quickly and efficiently.

Motivate / Scorecard

Scorecard: Call it a dashboard, a report card or a scorecard, the goal is the same… provide your network members with meaningful data that lets them know where they are, and what they need to do to get better. PerformanceGateway Scorecard can be configured to include estimatics, cycle time, audit results and survey data to provide a complete picture of performance.


PerformanceGateway Services

In addition to our software platform, we offer a wide range of services based on our industry knowledge and expertise surrounding Supplier Management. Managed Network Services: If you’re looking for all the benefits of a managed supplier network,

but don’t have the resources or the expertise to do it in-house, we provide ‘Managed Network Services’. We work with you to design your program, then we manage the network selection, on-boarding and approval and all the routine communication and updates.

Network Consulting Services: If you need a jump start on building or upgrading your network, we have years of experience and expertise in network best practices and design.

Survey Services: Our ‘Performance Feedback’ division provides phone, mail, email and web based survey services. Whether it’s surveying your supplier network or your claims handling, we have the knowledge and experience to get the job done.

To learn more about PerformanceGateway

PerformanceGateway 2418 Crossroads Drive Suite 3600 Madison, WI 53718 www.performancegateway.com Sales: 608-395-3472


PerformanceGatewayTM is a state of the art platform that powers supplier network

management.

PerformanceGatewayTM is a highly configurable application that enables companies

to achieve superior performance from their supplier networks through the use of

innovative software and services.

PerformanceGatewayTM is a division of Gates Business Solutions, an international provider of

Network Management Technology and Services. With operations in the US, Europe and Austral-

ia, Gates Business Solutions is a leader in developing products and services designed to help

companies achieve superior results from their supplier networks .


To learn more about PerformanceGateway

PerformanceGateway 2418 Crossroads Drive Suite 3600 Madison, WI 53718 www.performancegateway.com Sales: 608-395-3472

managing supplier networks

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networks of suppliers

network of suppliers

insurance company

networks of ias

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insurance customers

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