5 Top Tips on Managing Outsourced Activities
Article By Michelle Yeomans, EPiC Operations Manager
Most companies outsource when they do not have the resources or expertise to perform an activity or task, much in the same way as you may call in a tradesperson to do home improvements when you either do not have the time or the DIY skills to do the job yourself. In delegating the activity, it is important to remember that the company outsourcing remains responsible, so it needs to have a robust supplier management system in place to select and monitor the performance of suppliers undertaking any outsourced activities.
Here are our top tips for implementing appropriate due diligence for managing outsourced activities to avoid misunderstandings that could result in a product or operation of unsatisfactory quality:
- Establish and implement a circular supplier management system – You are trusting your suppliers with your business reputation and although they are not employees, a good supplier management system should follow similar steps to a HR performance management process from initial selection (recruitment shortlist), assessment (interview and assessment exercises), agreement of requirements and standards of work (Job description and written contract), monitoring of performance (regular 1:1s and feedback) and periodic review (performance review against objectives) to maintain oversight and ensure compliance and quality.
- Meaningful contracts – The phrase “the devil is in the detail” is often used to mean that although something may seem simple, the details can be more complicated and likely to cause problems if the requirements, responsibilities and specifics of the outsourced activities are not adequately defined. Contracts should therefore provide clear details of the delegated tasks, duties and functions between the parties. As a minimum they should confirm which products or service the contract relates to and the required standard of service, but should also consider the process for notification of changes, permission to audit, requirements for periodic review, and reference to further subcontracting to ensure this does not happen without the contract givers knowledge and approval. Contracts often include a table to summarise respective responsibilities using a tick or cross to show who is responsible for specific tasks, but to avoid ambiguity the table needs to include sufficient detail to break down specific activities where both parties have responsibilities under a given topic area.
- Involve technical experts in the supplier selection process – the supplier must have adequate premises, equipment and facilities, experience, knowledge and personnel to be able to successfully carry out the activity or task being outsourced. Technical experts should therefore be involved in specifying the detailed requirements of the activity or task being outsourced, and equally there needs to be someone with appropriate technical knowledge to be involved in contract negotiations on behalf of the supplier. This is to ensure full disclosure and consideration of relevant information to enable potential hazards to be assessed and facilitates visibility of contract requirements at an operational level e.g. embedded in project specific work instructions, to support compliance with contractual requirements and prevent unauthorised changes that may have an adverse effect on the quality of the outsourced task or activity.
- Project specific performance monitoring – having selected a supplier for your outsourced task or activity, a project specific strategy for risk-based performance monitoring should be implemented. Even if you are using a supplier that has been used before and is already on your approved supplier list, you should still consider whether any additional or interim performance monitoring may be required based on the risks associated with the new project or task being delegated.
- Assessing records and results – Whilst a robust supplier management system can give confidence in a suppliers technical ability, it is equally important to consider the output of their work by assessing the associated records and results to ensure outsourced tasks or activities have been performed in accordance with the contract and meet regulatory expectations. As ex MHRA Inspectors, we have seen numerous examples where certificates, service reports, and documentation packages have been filed with no evidence of review to check the data and confirm whether the results are acceptable. It is therefore essential that assessment checks are documented to confirm the outcome and stipulate any required actions. Any required follow-up can be addressed directly with the supplier or as part of regular feedback meetings to discuss performance against objectives and to identify and resolve issues.
Our top tips will hopefully help you and your suppliers to implement a proactive and collaborative approach to outsourcing, encouraging open and frequent communication to build partnerships and avoid misunderstandings that could have a negative impact on patients and business success.
Get in touch if you what to know more about how we can help improve your supplier management process by assessing and advising on the effectiveness of your current process, performing due diligence audits, or provision of training to develop in-house expertise to perform supplier selection, qualification, and performance monitoring activities.
Telephone: +44 (0)1244 980544 or email us at enquiries@epic-auditors.com