Vendor performance Management CPPC conference

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Canadian Public Procurement Council conference presentation Nov 2012 in Vancouver. A joint presentation with QCsolver and Merx. Presentation brought to you by QCsolver.com

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Vendor performance Management CPPC conference

  1. 1. PERSPECTIVES ON VENDOR PERFORMANCE MANAGEMENT: LET’S MITIGATE THE RISKVancouver 2012 Gerald Ford & Arthur Skuja
  2. 2. What is Vendor PerformanceManagement?It is a business practice that is used to measure,analyze, and manage a supplier’s performancein an effort to cut costs, alleviate risks, and drivecontinuous improvement.The ultimate intent is to identify potential issuesand their root causes so that they can beresolved as early as possible.
  3. 3. What is Audience ResponseTechnology? Audience Response Technology is an interactive tool which allows YOU to weigh-in in real time using simple intuitive polling software and response devices. Corporate sponsor:
  4. 4. Which image best describes how you feeltoday… 1. 2. 32 3. 4. 5 2 0 1 2 3 4
  5. 5. Things less painful than an eight minute survey
  6. 6. Survey Says! Top 8 answers on the Board Stick in the eye 14 Salt on open wound 12 Pocket full of bees 8 A punch in the …. 5
  7. 7. Case Study: Ministry ofTransportation Ontario MTO uses the Registry, Appraisal & Qualification System (RAQS/MERX) to manage vendor qualification and vendor performance for infrastructure procurement RAQS/MERX is an integrated procurement solution with support for:  MTO user roles  Process workflows  Internal system data flows  Internal and external communications
  8. 8. MTO Approach to Vendor Performance Management Vendor performance, qualifications and ratings are linked Vendor qualifications and ratings are tied to fixed categories of work Rating assessments are subject to formal workflows and based on detailed contractor information Published tenders refer to required categories of work and required ratings
  9. 9. RAQS/MERX Key Processes Vendor management  Vendor registration & qualification  Vendor performance assessment  Vendor rating Project tendering  Project notice advertising  Document distribution  Contractor communications Bid results and evaluation  Results evaluation / trend analysis  Awards and Work On Hand update
  10. 10. MTO Vendor Qualifications Qualifications based on detailed vendor information:  Financial assets  Financial liabilities  Business information  Litigation  Experience  Work on Hand  Equipment  Key personnel
  11. 11. MTO Vendor PerformanceManagement Vendor contract performance evaluation is focused on key parameters  Quality  Safety  Timeliness  Execution Any performance issues reported immediately  Infractions  Warnings
  12. 12. MTO Vendor Rating Vendor ratings are expressed as dollar values Ratings are used to assess capability for vendor to do work and bid on new projects Ratings are calculated based on:  Qualification data  Work on Hand  Performance and infraction data
  13. 13. Vendor Selection Process Transparent procurement process • Advertisements open to the public • Categories of work and dollar value rating identified • Contractors apply for permission to bid • Only qualified vendors with an adequate rating are approved to bid • Supported by workflow & appeal process
  14. 14. Benefits of the MTO Approach Open process promotes competition Higher quality bids only from qualified contractors Detailed vendor information supports better decision making Lowers costs by reducing need for bonding Integrated system supports consistent processes supported by audit trails
  15. 15. How do you compare to MTO - which sector are you in? 161. Municipal2. Academic (University/College)3. School Board 84. Health Care 65. Broader Public Sector 4 46. Private Sector 17. Federal/Provincial 0 1 2 3 4 5 6 7
  16. 16. How many employees work for yourorganization? 1 to 9 141.2. 10 to 243. 25 to 994. 100 to 249 95. 250 to 499 76. 500 to 9997. 1000 to 24998. 2500 + 3 2 1 1 0 2 3 4 5 6 7 8 9
  17. 17. Other than CPPC which Organization(s) doyou belong to?Pick as many as you would like! 20 1. OPBA 2. OIPMAC 3. NIGP 13 4. OECM 11 5. CMC 6. HSCN 7. Construction Association 5 4 4 3 8. ISM 1 1 9. Other 0 1 2 3 4 5 6 7 8 9 10 10. None
  18. 18. Survey Says!OPBA = Ontario Public Buyers AssociationCPPC = Canadian Public Procurement CouncilNIGP = National Institute of Governmental PurchasingOECM = Ontario Educational Collaborative MarketplaceCMC = Canadian Association of Management ConsultantsHSCN= Healthcare Supply Chain Network
  19. 19. How many competitive bids did your group issue in 2011? 131. 1 to 49 112. 50 to 99 93. 100 to 1494. 150 to 199 45. Greater than 200 1 1 2 3 4 5
  20. 20. How many competitive bids did theTown of Oakville issue in 2011? 180
  21. 21. On average how many vendor performanceevaluations do you do per year? 141. None2. 1 to 10 10 93. 11 to 254. 26 to 495. 50+ 4 0 1 2 3 4 5
  22. 22. Survey Says!
  23. 23. Which tools or methods do you use? Pick as many as you would like!1. Checklists 17 17 172. Forms 16 153. Templates4. User Guides & Manuals5. Progress meetings 8 86. Performance documentation7. 3rd Party verification 1 2 3 4 5 6 7
  24. 24. Which tools or methods do you use?
  25. 25. What triggers an evaluation?1. Periodic 19 192. Budget Threshold3. Contract performance4. Project profile5. New vendor 11 106. Project complexity 9 9 87. Client Dissatisfaction 6 68. Repeat vendors9. Length of Engagement10. Every Project 1 1 2 3 4 5 6 7 8 9 10
  26. 26. Survey Says!
  27. 27. Problems with Purchasing and SupplyChain Measurement and Evaluation  Too much data  Wrong data  Measurements that are short-term focused  Lack of detail  Drive the wrong performance  Measures behavior vs. accomplishmentsLeopold Koff, B.A., B.Ed., CPSM, CPM, CSCMP 27Professor, Supply Chain & Operations ManagementSchool of Business & Hospitality
  28. 28. Examples of Automated Systems TQRDC VPM
  29. 29. On a scale from 1 to 5, what is the average score you give to your contractors when you do evaluations?1. Poor 13 132. Acceptable3. Standard4. Good5. Excellent 3 2 1 1 2 3 4 5
  30. 30. Central tendency State of Florida Overall Rating70% 66% 5105 Surveys conducted in April 201060%50%40% Overall Rating 31%30%20%10% 3%0% >= 1.00 to <= 2.80 >= 2.81 to <= 3.20 >= 3.21 to <= 5.00
  31. 31. Simplified 3M team rating (TQRDC) T – Technology Q – Quality R – Responsiveness D – Delivery C – CostCourtesy: Jeff van GeelManager Sourcing & Accounts Payable
  32. 32. Courtesy: Jeff van GeelManager Sourcing & Accounts Payable
  33. 33. Simplified Scorecard 1. Focus on improvement 2. Present facets of performance without aggregation. Do not dilute message. 3. Communicate dashboard – detail in meeting 4. Scope: all material & servicesCourtesy: Jeff van GeelManager Sourcing & Accounts Payable
  34. 34. All information for exercise onlyCourtesy: Jeff van GeelManager Sourcing & Accounts Payable
  35. 35. ABC Contracting Grand River Ford’s Excavation Landscaping
  36. 36.  For ratings that are “Below Standard” and explanation must be enteredEasy to create, fill out and explain!
  37. 37. The “below Standard” Comment Easy colour coding to spot what needs to be reviewed quickly. Data can be exported for further calculations if required.
  38. 38. What is important for an effective engagement?Pick in order of priority. 1st , 2nd or 3rd most important 1. Effective communication throughout engagement 23% 2. Quality of resources 20% 3. Availability of resources to carry out 18% contract 4. Quality of the final deliverables 12% 11% 5. Providing value added services 6. Maintaining timelines/deadlines 6% 5% 6% 7. Budget/cost control 8. Having a vendor contact for dispute resolution 1 2 3 4 5 6 7 8
  39. 39. Survey Says
  40. 40. What are your greatest challenges tohaving an effective VPM! 15 1. Not enough time 2. End user input difficult to get 12 3. Poor systems 10 4. Not required 5. Missing linkage between contract and 6 performance 4 6. Comparative Consistency 0 1 2 3 4 5 6
  41. 41. Is the use of bonding a viable alternativeto vendor performance management?1. Yes 162. No3. Depends 11 9 1 2 3
  42. 42. Do you share performance results with vendors? 1. Yes 25 2. No 6 1 2
  43. 43. Do you tie VPM data to proposal evaluationsand vendor selection? 1. Proposals 2. Evaluations 12 3. Both 8 4. Neither 7 2 1 2 3 4
  44. 44. Do you tie vendor qualification tospecific procurements or a generalwork or product category? 211. Specific2. General3. Product Category 6 3 1 2 3
  45. 45. 1. Construction – Commodity - Contract2. Contractor - Consultant3. Consistency - Customizable4. Crowdsourcing – Collaborative - Comments5. Compare - Contrast6. Credible – Context7. Cost
  46. 46. And how do you feel now? 1. 2. 18 3. 4. 6 6 5 1 2 3 4
  47. 47. Gerald Ford CSCMP Arthur Skuja grford@csolutions.org askuja@merx.com 905-296-4003 613-727-4917 226-474-1169

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