What are the best practices for vendor escalation and resolution in third party management?

1 Define escalation criteria and process

Before you start working with a vendor, you should agree on the criteria and process for escalation. This means setting clear expectations, roles, and responsibilities for both parties, as well as identifying the escalation levels, triggers, and channels. You should also document the escalation process in your contract or service level agreement (SLA), and review it regularly with the vendor. Having a clear and consistent escalation process will help you avoid confusion, conflict, and delays when issues arise.

2 Communicate effectively and respectfully

Communication is key to successful vendor escalation and resolution. You should communicate with the vendor as soon as you notice an issue, and provide them with the relevant information, evidence, and feedback. You should also listen to their perspective, and try to understand the root cause and impact of the issue. You should communicate with the vendor in a respectful and professional manner, avoiding blame, criticism, or threats. You should also keep your internal stakeholders informed of the issue and the escalation status, and align your expectations and actions with them.

3 Collaborate and negotiate on solutions

Once you have communicated the issue and escalated it to the appropriate level, you should work with the vendor to find a mutually acceptable solution. You should collaborate and negotiate with the vendor, rather than dictate or impose your terms. You should focus on the desired outcomes, not the positions or interests of each party. You should also consider the risks, costs, and benefits of different options, and evaluate them objectively and fairly. You should aim to reach a win-win solution that satisfies both parties and preserves your relationship.

4 Monitor and follow up on actions

After you have agreed on a solution with the vendor, you should monitor and follow up on the actions taken to implement it. You should track the progress and performance of the vendor, and verify that they have met the agreed standards and deadlines. You should also provide them with feedback and recognition for their efforts, and celebrate the achievements and improvements. You should document the resolution process and outcomes, and update your contract or SLA accordingly. You should also learn from the experience, and identify any areas for improvement or prevention.

5 Escalate to external parties if needed

In some cases, you may not be able to resolve the issue with the vendor internally, and you may need to escalate it to external parties. This could include legal, regulatory, or contractual authorities, or independent mediators or arbitrators. You should only resort to this option as a last resort, when all other attempts have failed, and when the issue poses a significant risk or damage to your organization or project. You should also consult with your legal and compliance teams, and follow the relevant policies and procedures. You should be prepared for the possible consequences and costs of escalating to external parties, and try to maintain a positive and constructive relationship with the vendor.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?