Best Practices for Implementing Dynamic Tiering

Jim Humrichouse Blog

In our last blog we discussed the evolution of the supplier selection process and how Dynamic Tiering is a superior method for Managed Service Provider programs. For this post we’re going to talk about the process of actually implementing dynamic tiering.

The process can seem daunting, but if you take these important steps before implementing the dynamic tiering, you will be set up for success and can reap the rewards of the process.

Commercial VMS

Step 1: Gathering Data

  • Dynamic tiering requires a leading commercial Vendor Management System (VMS) configured to capture detailed data at the individual-job requirement and individual-supplier level.

Business Intelligence Engine

Step 2: Making a Decision

  • A good VMS is required to capture and report data, but a leading Business Intelligence engine drives your decision-making.
  • Business Intelligence engines can model, weigh, and visualize the capabilities of a large pool of suppliers.

Rate Card Breakdown

Step 3: Define the Role

  • Break down job titles and rates into more specific/accurate categories to model supplier performance more effectively
  • For greater accuracy, avoid catch-all titles like “consultant,” or “software developer,” or “engineer.”

Supplier Performance

Step 4: Define the Goals

  • Clearly define and weight “success” for your suppliers – e.g., speed, quality, price, attrition, etc.
  • There is no single definition of success.  Clients value different combinations and weighting, typically driven by skill category.

Implementing dynamic tiering can initially seem like a significant effort, but large programs gain important benefits from the process – including supplier performance, savings, and risk reduction. But this isn’t limited to just large programs. Smaller programs can implement a more limited version of dynamic tiering that will also achieve positive results.  In both cases, the initial investment is well worth the longer-term benefits.

If you haven’t already, read the first post in this series, and be sure to watch this space for more posts in the coming weeks.