You are planning to outsource billing operations and you are in a good position. You have analysed all the activities and unit costs and you know that it currently costs €14.00 to issue each monthly bill to a customer. You have shortlisted two suppliers - Supplier A has quoted €8.00 per bill issued and Supplier B has quoted €7.00 per bill issued.
Both have guaranteed service quality and are willing to sign up to punitive service credits, if they fail to meet billing accuracy and quality metrics. You are thinking supplier B is the right choice, but then you call a friend who always has the inside track on these things, and she sends you the following diagram with one condition – you can’t show it to anyone, even your boss. Now what do you do?
This is the perennial challenge of supplier selection for outsource billing operations or other back office service. There will always be a supplier who will low-ball the price and worry about quality later, but you don’t have the evidence to support a business case for the best value option.
The challenge is that you have no reliable way to measure what quality a supplier can deliver at a given price – The supplier that has quoted the €7.00 price can give lots of references for a quality service, but the information that is missing is that all of those contracts are at a €14.00 price.
What do you do?
Thinking of outsource billing or other administrative process?
Then contact us to see how we can help with your BPO project.