Supplier Agreement Management: A Project and Work Management Process Area at Maturity Level 2
Purpose
The purpose of Supplier Agreement Management (SAM) is to manage the acquisition of products and services from suppliers.
Introductory Notes
The scope of this process area addresses the acquisition of products, services, and product and service components that can be delivered to the service’s customer or included in a product or service system. This process area’s practices can also be used for other purposes that benefit the service (e.g., purchasing consumables).
This process area does not apply in all contexts in which commercial off-the-shelf (COTS) components are acquired but does apply in cases where there are modifications to COTS components, government off-the-shelf components, or freeware, that are of significant value to the work or that represent significant risk.
Throughout the process areas, where the terms “product” and “product component” are used, their intended meanings also encompass services, service systems, and their components.
The Supplier Agreement Management process area involves the following activities:
• Determining the type of acquisition
• Selecting suppliers
• Establishing and maintaining agreements with suppliers
• Executing supplier agreements
• Accepting delivery of acquired products
• Ensuring successful transition of acquired products
Typically, the products to be acquired are determined during the early stages of planning and development of the service system.
This process area does not directly address arrangements in which the supplier is integrated into the work group and uses the same processes and reports to the same management as the work group members. Typically, these situations are handled by other processes or functions (e.g., work management processes, processes or functions external to the work group) though some of the specific practices of this process area can be useful in managing the supplier agreement.
This process area typically is not implemented to address arrangements in which the work group’s customer is also a supplier. These situations are usually handled by either informal agreements with the customer or by specification of the customer furnished items in the overall agreement that the work group has with the customer. In the latter case, some of the specific practices of this process area can be useful in managing the agreement, although others may not, due to the fundamentally different relationship that exists with a customer as opposed to an ordinary supplier. See the CMMI-ACQ model for more information about other types of agreements.
Suppliers can take many forms depending on business needs, including in-house suppliers (i.e., suppliers that are in the same organization but are external to the work group), fabrication departments, suppliers of reuse libraries, and commercial suppliers. (See the definition of “supplier” in the glossary.)
A supplier agreement is established to manage the relationship between the organization and the supplier. A supplier agreement is any written agreement between the organization (representing the work group) and the supplier. This agreement can be a contract, license, service level agreement, or memorandum of agreement. The acquired product is delivered from the supplier according to the supplier agreement. (See the definition of “supplier agreement” in the glossary.)
Related Process Areas
Refer to the Requirements Management process area for more information about maintaining bidirectional traceability of requirements.
Refer to the Work Monitoring and Control process area for more information about monitoring the work against the plan and managing corrective action to closure.
Specific Practices by Goal
SG 1 Establish Supplier Agreements
Agreements with the suppliers are established and maintained.
SP 1.1 Determine Acquisition Type
Determine the type of acquisition for each product or product component to be acquired.
Many different types of acquisitions can be used to acquire products and product components that can be used for the work.
If acquiring modified COTS products of significant value to the work or that represent significant project risk, care in evaluating and selecting these products and the supplier can be critical to the work. Aspects to consider in the selection decision include proprietary issues and the availability of the products.
Example Work Products
1. List of the acquisition types that will be used for all products and product components to be acquired
SP 1.2 Select Suppliers
Select suppliers based on an evaluation of their ability to meet the specified requirements and established criteria.
Refer to the Decision Analysis and Resolution process area for more information about analyzing possible decisions using a formal evaluation process that evaluates identified alternatives against established criteria.
Criteria should be established to address factors that are important to the work.
Example Work Products
1. Market studies
2. List of candidate suppliers
3. Preferred supplier list
4. Trade study or other record of evaluation criteria, advantages and disadvantages of candidate suppliers, and rationale for selection of suppliers
5. Solicitation materials and requirements
Subpractices
1. Establish and document criteria for evaluating potential suppliers.
2. Identify potential suppliers and distribute solicitation material and requirements to them.
A proactive manner of performing this activity is to conduct market research to identify potential sources of candidate products to be acquired.
3. Evaluate proposals according to evaluation criteria.
4. Evaluate risks associated with each proposed supplier.
Refer to the Risk Management process area for more information about identifying and analyzing risks.
5. Evaluate proposed suppliers’ abilities to perform the work.
Future releases of the modified COTS product can provide additional features that support planned or anticipated enhancements for the work, but can result in the supplier discontinuing support of its current release.
6. Select the supplier.
SP 1.3 Establish Supplier Agreements
Establish and maintain supplier agreements.
A supplier agreement is any written agreement between the organization (representing the work) and the supplier. This agreement can be a contract, license, service level agreement, or memorandum of agreement.
The content of the supplier agreement should specify the arrangement for selecting supplier processes and work products to be monitored, analyzed, and evaluated, if the arrangement is appropriate to the acquisition or product being acquired. The supplier agreement should also specify the reviews, monitoring, evaluations, and acceptance testing to be performed.
Supplier processes that are critical to the success of the work (e.g., due to complexity, due to importance) should be monitored.
An acquired service can be delivered directly to the service provider’s customer or end user. The content of the supplier agreement for such an acquired service should also specify whether the acceptance process will be performed before, during, or after supplier delivery. If the supplier will continuously or repeatedly deliver the service to the customer, the content should also specify when or how often the acceptance process will be performed (e.g., every time the service is delivered, at specified or random times on a subset of the service deliveries).
Supplier agreements between independent legal entities are typically reviewed by legal or contract advisors prior to approval.
Supplier agreements should address the expected end of service, early end of service, and transition of service as appropriate.
Example Work Products
1. Statements of work
2. Contracts
3. Memoranda of agreement
4. Licensing agreement
Subpractices
1. Revise the requirements (e.g., product requirements, service level requirements) to be fulfilled by the supplier to reflect negotiations with the supplier when necessary.
Refer to the Requirements Management process area for more information about managing requirements of the project’s products and product components and to ensure alignment between those requirements and the project’s plans and work products.
2. Document what the work group will provide to the supplier.
Include the following:
• Work group furnished facilities
• Documentation
• Services
3. Document the supplier agreement.
The supplier agreement should include a statement of work, a specification, terms and conditions, a list of deliverables, a schedule, a budget, and a defined acceptance process.
4. Periodically review the supplier agreement to ensure it accurately reflects the work group’s relationship with the supplier and current risks and market conditions.
5. Ensure that all parties to the supplier agreement understand and agree to all requirements before implementing the agreement or any changes.
6. Revise the supplier agreement as necessary to reflect changes to the supplier’s processes or work products.
7. Revise the work plans and commitments, including changes to the work group’s processes or work products, as necessary to reflect the supplier agreement.
Refer to the Work Monitoring and Control process area for more information about monitoring commitments.
SG 2 Satisfy Supplier Agreements
Agreements with suppliers are satisfied by both the work group and the supplier.
SP 2.1 Execute the Supplier Agreement
Perform activities with the supplier as specified in the supplier agreement.
Refer to the Work Monitoring and Control process area for more information about providing an understanding of the ongoing work so that appropriate corrective actions can be taken when the performance deviates significantly from the plan.
Example Work Products
1. Supplier progress reports and performance measures
2. Supplier review materials and reports
3. Action items tracked to closure
4. Product and documentation deliveries
Subpractices
1. Monitor supplier progress and performance (e.g., schedule, effort, cost, technical performance) as defined in the supplier agreement.
2. Select, monitor, and analyze processes used by the supplier as defined in the supplier agreement.
Supplier processes that are critical to the success of the work (e.g., due to complexity, due to importance) should be monitored. The selection of processes to monitor should consider the impact of the selection on the supplier.
3. Select and evaluate work products from the supplier as defined in the supplier agreement.
The work products selected for evaluation should include critical products, product components, and work products that provide insight into quality issues as early as possible. In situations of low risk, it may not be necessary to select any work products for evaluation.
4. Conduct reviews with the supplier as specified in the supplier agreement.
Refer to the Work Monitoring and Control process area for more information about conducting milestone reviews and conducting progress reviews.
Reviews cover both formal and informal reviews and include the following steps:
• Preparing for the review
• Ensuring that relevant stakeholders participate
• Conducting the review
• Identifying, documenting, and tracking all action items to closure
• Preparing and distributing to the relevant stakeholders a summary report of the review
5. Conduct technical reviews with the supplier as defined in the supplier agreement.
6. Conduct management reviews with the supplier as defined in the supplier agreement.
Technical and management reviews can be coordinated and held jointly.
7. Use the results of reviews to improve the supplier’s performance and to establish and nurture long-term relationships with preferred suppliers.
Possible sources for improvements to the supplier’s performance or the organization-supplier relationship can come from analyzing the results of technical and management reviews as well as a comprehensive review that ensures alignment of business needs and contractual obligations. A comprehensive review of supplier agreements is held periodically to ensure alignment of business needs and contractual obligations. Improvements identified during these reviews can be recorded and included in an improvement plan.
8. Monitor risks involving the supplier and take corrective action as necessary.
Refer to the Risk Management process area for more information about identifying and analyzing risks.
SP 2.2 Accept the Acquired Product
Ensure that the supplier agreement is satisfied before accepting the acquired product.
An acceptance process involving appropriate activities, such as acceptance reviews, tests, and configuration audits, should be completed before accepting the product as defined in the supplier agreement.
When acquiring a service that will be delivered directly to the service provider’s customer or end user, this practice can be implemented before, during, or after delivery of the service to the customer or end user. Potentially you can implement this specific practice more than once.
Example Work Products
1. Acceptance procedures
2. Acceptance reviews or test results
3. Discrepancy reports or corrective action plans
Subpractices
1. Define the acceptance procedures.
2. Review and obtain agreement from relevant stakeholders on the acceptance procedures before the acceptance review or test.
3. Verify that the acquired products satisfy their requirements.
4. Confirm that the nontechnical commitments associated with the acquired products are satisfied.
This confirmation can include confirming that the appropriate license, warranty, ownership, use, and support or maintenance agreements are in place and that all supporting materials are received.
5. Document the results of the acceptance review or test.
6. Establish an action plan and obtain supplier agreement to take action to correct acquired products that do not pass their acceptance review or test.
7. Track action items to closure.
Refer to the Work Monitoring and Control process area for more information about managing corrective action to closure.
SP 2.3 Ensure Transition of Products
Ensure the transition of products acquired from the supplier.
Before the acquired product is transferred to the project, customer, or end user, appropriate preparation and evaluation should occur to ensure a smooth transition.
Example Work Products
1. Descriptions of how ongoing support obligations, such as warranties and licenses, will be satisfied
2. Transition plans
4. Support and maintenance reports
Subpractices
1. Ensure that facilities exist to receive, store, integrate, and maintain the acquired products as appropriate.
2. Ensure that appropriate training is provided for those who are involved in receiving, storing, integrating, and maintaining acquired products.
3. Ensure that acquired products are stored, distributed, and integrated according to the terms and conditions specified in the supplier agreement or license.