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Managing Contractors: Five practical steps for managing contractor compliance

As a business owner, Procurement Manager or Health & Safety Manager, you have enough on your plate without worrying about how changes to health and safety legislation impact on your contractors; and just hoping they all remain compliant is probably not a sensible option. These issues are critical because a non-compliant contractor represents a serious risk to your business.

As a market leader, we have been helping clients work with their suppliers and contractors to improve relationships and ensure overall compliance, by implementing our “Supply-Chain Compliance Framework”.

Follow these four steps to start that journey yourself.

1 – Be clear on your requirements

The starting point for managing your suppliers is to be clear about what you require from them. While this might sound obvious, all too often suppliers are asked to do something that is outside their capability, but they attempt to do it because they don’t want to turn down business. Also, suppliers often fail compliance audits because they are asked to provide evidence of capabilities to carry outwork which they never claim to have a competence for – just because a rigid procurement process says they must do.

Efficient and effective supplier management requires more than a rigid one-size fits all solution. Each supplier should be managed according to the work they will be required to complete. After all, there’s probably little benefit in asking a small electrical maintenance contractor to evidence a Corporate Social Responsibility and Ethical Procurement policy simply because that’s, “our company policy”.

Key takeaway

Categorise your suppliers by grouping them into the types of work that they are likely to carry out for you. Separately, list all the different types of work that are required by your business, and then list the compliance requirements next to each one. Once that is complete, pair the suppliers to the specific compliance requirements. You now have a starting point for your supplier compliance management requirements.

For easy and efficient management of all of your suppliers, Exigo Essentials provides a comprehensive library of compliance templates.

2 – Get evidence of capability

This is an area of supplier compliance that most companies will be managing to some degree. It is intended to make sure suppliers are capable, on paper at least, of doing what you want them to do.

This starts with gathering information that will demonstrate that the supplier meets your business needs; do they do the work you require? Do they work in your geographic area? Do they have the right level of insurance? Are they big enough to conduct the work being contracted out?

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Gather all of the information you require from a questionnaire and obtain documentation – such as insurance policies, professional certifications, etc., that satisfies your compliance requirements.

When contracting work carries an element of risk, it’s often inadequate to simply take the contractors claims on face value. Therefore it is essential, and sometimes a legal requirement, to check their claims.  This may involve verifying the documentation with third-parties, such as certification bodies, insurance companies, etc.

Finally, once the documentation has been validated, it is essential to let the contractor know, and also to record internally, exactly what they have been verified for. If this isn’t done, they may be asked, and they may agree, to do things outside their verified scope that will expose your business to unnecessary risk.

Key takeaway

Collect the information and documentation you need from each contractor and then contact the relevant third-parties where necessary, to ensure the information is accurate and up-to-date. A solution such as Exigo Essentials contractor management software can store and validate you contractor’s documentation.

3 – Communicate your requirements clearly

As with any form of management, supplier and contractor management requires clear and effective communication. You want to communicate exactly what it is that you are purchasing and expecting from the supplier or contractor. This can extend beyond the actual product or service, for example, warranties, manuals, certification, etc.  The contract is not fulfilled until all specified items are delivered.

Ensure all of your company’s policies and rules have been communicated to your contractors. If you have people working on site, on-site inductions are good examples of processes that are implemented on construction sites to make sure everyone knows the policies and rules. Having a readily available repository of your policies & rules that your contractors can access at any time provides clarity to all parties.

Key takeaway

Make sure your expectations are clearly communicated to your suppliers and contractors. Ensure they have access to your rules and policies for clear and transparent communication. Learn more about Exigo Essentials software and the secure document storage vault.

4 – Monitoring

Once your contractors are fully compliant, know exactly what is required of them and how your business operates, the next task is to ensure you get the service you expect.

Conducting audits can be an effective tool for measuring whether or not all the processes undertaken so far, by you and your contractors are achieving the desired outcomes.  Be careful not to use audits only when situations are taking a turn for the worst. Audits are not a tool for fire-fighting, but are most effective when used to facilitate continuous improvement – rather than a tool of last resort.

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Use your audits to assess contractor behaviour and measure them against key performance indicators (KPIs). At the most basic level, assessing behaviour ensures contractors arrive on time, follow policies and procedures or communicate in a polite and courteous manner. KPIs, on the other hand, allow you to monitor outcomes on an ongoing basis. They are very useful for detecting trends and raising standards once processes are established and stable.

Key takeaway

To maintain strong contractor relationships, you should implement an audit schedule to ensure every contractor is audited at least annually. Findings from the audit should be used to improve performance and processes between your business and the contractor.

5 – Bring it all together

Whilst the four steps outlined here are a practical way for managing supply chain compliance, carrying them all out single handily can be a hugely daunting task for anyone. So, for the four steps above there is one simple solution: Exigo Essentials.

Exigo Essentials is a scalable solution designed to give you complete control and help in managing contractors, processes and tasks, and will easily enable you to take care of the steps we have outlined here. Like the sound of Exigo Essentials? Sign up to our webinar below and see how Exigo will help you implement a smarter contractor management process.

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Best practice guide to supply chain compliance now available as a free download.