2. • Vendor/Supplier
Management Tools and
Mechanisms
• Leveraging Technology
• Diversity
• Case Studies
• Wrap Up
• Class Objectives
• Relationship Management
Models (CRM vs. VRM/SRM)
• Outreach Mechanisms for
Clients, Internal and External
Stakeholders, and Customers
• A Bit on Client Service
• A Bit on Working with Internal
and External Stakeholders
Course Overview/Outline
2
3. • Name
• Where you work, your title, and function
• Your background and experience
• Something interesting you’re doing at work
• Why you are here
• Something non-work related
Self Introductions
3
4. • Participate and ask questions
• Share your own experiences
• Network with your colleagues
• Stay comfortable
• Explore differences
• Recognize that the instructor is aware that he does not
(1) know everything; (2) always have the right answer.
Getting the Most Out of this Course
4
5. Participants will be able to:
• Distinguish a procurement program from a procurement agency
• Describe public procurement as a system/subsystem
• Explain the value of good relationships in procurement programs
• Identify and describe the key relationships in procurement
• Discuss why each identified relationship is significant
• Apply information, ideas, tools, and best-practices to build and
sustain effective procurement relationships
• Enable others to apply information, ideas, tools, and best-
practices to build and sustain effective procurement relationships
Intended Learning Outcomes
5
6. We can contribute the most to the strategic success of our
public enterprises if we relate well to the other
participants and stakeholders in the procurement process.
Why is This Topic Important?
* Our public enterprises
6
7. KEY RELATIONSHIPS IN A PROCUREMENT
PROGRAM
Clients
Departments You Buy For
Examples of such
departments
Categories of clients
within departments
Stakeholders
Recipients of Services Provided
Others Impacted by Services Provided
Governing Body and Individual Elected Officials
Electorate, Ratepayers, etc.
Various Categories of the General Public
Participants
Involved Departments:
Examples of such
departments
Categories of participants
within departments
7
8. WHAT IS A PROCUREMENT PROGRAM?
Every business unit, every line of business, every individual, all the
technology, and everything else that together comprises the
production system that supplies departments the goods, services,
and construction needed to support the achievement of the
enterprise’s mission, vision, goals, and objectives.
8
9. Procurement
Operations*
P-Cards
RFQ
IFBs
RFPs
What Else?
Inputs
Requisitions
Emergency
Procurement
Requests
Sole Source
Requests
What Else?
PUBLIC PROCUREMENT SYSTEM
Level 1
Outputs
Purchase
Orders
Contracts
Release
Orders
What Else?
Level 2
Outputs
Goods,
Services,
and
Construction
Delivered
Compliance
Integrity of
Process
Maintained
What Else?
Outcomes
Clients
Requirements
Fulfilled
Stakeholders
Satisfied
Mission,
Goals, and
Objectives
Met
What Else?
Feedback Loop
External Environmental
Influences
External Environmental
Influences
Internal Environmental
Influences
9
10. VALUES AND PERSONAL TRAITS OF ALL THE
PARTICIPANTS IN THE PROCUREMENT PROCESS
• Among the “Internal” Environmental Elements that Affect the
Quality of Procurement Outputs and Outcomes
• As Important as Competencies
• Questions:
1. What values should the ideal public procurement official have if
he or she is going to relate as well as possible to clients, vendors,
suppliers, and other participants in the procurement process?
2. What personal traits should the ideal public procurement official
have if he or she is going to relate as well as possible to clients,
vendors, and other participants in the procurement process?
3. Can the behavior of public procurement officials be acceptable
regardless of their values or personal traits? 10
11. • Read the case study School District
Construction Project
• Consider the following questions:
1. What are your options?
2. How do you bring project manager into
discussion?
3. What is your first communication with
prime contractor?
4. What could have been done earlier to
prevent this situation?
[Revisit these questions.]
Construction Project Case Study
11
12. • Seeks input to better understand and respond to our clients
• Collects large amounts of data
• Can use the data to analyze and set strategic direction
• Can impact entire customer relationship cycle
• Data can show needs and desires to which we can respond
• Comprises more than software and solutions (IT)
Customer Relationship Management
(CRM)
12
13. For a CRM program to be effective, we must:
• Identify, understand, and prioritize the “pain points”
• Develop a program that our agency can afford in terms of
potential benefits and opportunity and actual costs
• Once program is in place, motivate all staff to participate
• Measure and evaluate the level and quality of CRM
• Continuously improve the CRM program.
Using CRM to Improve Relationships
with Clients
13
14. • Three aspects of CRM software:
• Operational - automated customer processes support the
procurement agency’s outreach/interaction efforts
• Collaborative – facilitates communication and coordination
throughout the procurement program
• Analytical – enables the procurement agency to analysis of
customer information for multiple purposes.
• Each aspect can be implemented in isolation from the others.
CRM Software
14
15. Better understand clients’ needs and behavior
Generate more reliable forecasts
Enable more timely, more efficient, and more consistent
and accurate communication
Gauge the impact of decisions made and actions taken by
the procurement agency
Feed data on customer preferences and problems to staff
and management;
Increase effectiveness and success by systematically
identifying and managing identified issues
Improve customer relationships/interactions overall
CRM Benefits
15
16. Brief Case Study: You are the city’s chief procurement officer.
The director of parks and recreation tells you two weeks before
the city’s pools are scheduled to open that the contractor who
maintains the quality of the water in the pools cannot
guarantee that the quality of the water in the pools will be
what it needs to be on the scheduled opening day unless the
contractor is granted an immediate 20% increase in what it is
paid. Working in your assigned group of students, fill in the
blanks; then, explain how you and the other members of your
group will proceed. Be prepared to be questioned by members
of the other groups, acting in the roles of the city manager’s
office, the city council, and the local media.
Balanced Supplier Relationships
16
17. Is the reciprocal of CRM
Provides customers with tools to help make
markets work for both suppliers and customers
Equips customers to be the leaders in their
relationships with vendors
To work, vendors must have reason to value VRM.
Customers must invest the necessary time, effort
and attention to making it work
Vendor Relationship Management(VRM)/Supplier
Relationship Management (SRM)
17
18. Facilitates better mutual understanding between a procurement program and its
supplier understanding of an entity’s operation
Facilitates collaboration between a procurement program and its vendors and
suppliers
Result is greater buyer satisfaction.
Value of Quality Vendor/Supplier
Relationship
18
19. When is it important to form a strong relationships with a vendor or supplier;
when is it not.
When a strong relationship would be helpful, what could prevent it from
contributing as much to quality outputs and outcomes as intended?
How should a procurement agency determine the trustworthiness of a
vendor or supplier with which it considering entering into a relationship?
How might a vendor or supplier determine the trustworthiness of a public
entity that is seeking to enter a strong relationship with it?
How might a strong relationship be built when the solicitation will be an IFP.
How might a strong relationship be built when the solicitation will be an RFP?
What type or types of contracts or contract provisions would conform well
with strong relationships?
What are the do’s and don'ts for a public procurement agency when seeking
to form a strong relationship?
Establishing the Strong Relationship
19
20. • Ensure that suppliers receive all the business under their contract.
• “Rogue buyers” can hurt the vendor/buyer relationship.
• Both parties must realize that things won't be perfect.
• Some products won't live up to buyer expectations;
• Some invoices won't be paid correctly.
• Buyers and sellers should decide in advance how to solve problems.
SRM
Establishing the Strong Relationship
20
21. • A strong communication network allows:
o Real-time transfer of information.
o Suppliers to view forecasts, inventory, and performance ratings.
• Consider VRM/SRM Software
Using Technology in VRM/SRM
21
22. • An e-procurement product.
• Allows buyers real-time communications via web-based programs.
• Automates much of the negotiation process; simplifies online bidding.
• Organizations find out when to expect deliveries.
• Suppliers know exactly when buyer's inventories need replenishing
• •One of the biggest advantages of using SRM software.
Save money thanks to the competitive bidding.
Fewer employees are needed for supplier relationship
management.
Employees can be devoted to other productive areas.
Paperwork is almost completely obsolete with these systems.
Cost of finding a supplier and negotiating contracts is also easier
with the software.
• It is important to have a competent vendor in order to skillfully
navigate the waters of SRM software.
VRM/SRM Software
22
23. • Organizations must able to plan, implement, and use
• Procurement officials must be open to collaboration.
Preparing for VRM/SRM
Software
23
24. • SRM can definitely be an asset, especially those who are
trying to cut down costs.
• For most organizations, all of these benefits can be
achieved simply by creating stronger supplier/buyer
relationships.
• Using software and implementing it into an existing ERP
system, organizations help both parties accomplish their
tasks in a more efficient manner.
VRM/SRM Summary
24
25. • Read the article “A Trashy Story about the City of Portland’s trash
hauling contract
• The incumbent contractor has an issue with the City’s
procurement process. What is it?
• Was the City responsible for notifying the incumbent?
• Should the City purchasing agent re-open the bidding process?
• What are the responsibilities of the contractor in this case?
Procurement Technology Case Study
A Trashy Story
25
26. • Lessons we learn:
The more you do, the less you have to do.
Saying it once or in just one way – won’t do.
Outreach – Reaching Out to End-Users
26
27. • Outreach is a very important
and worthwhile investment.
The More You Do,
The Less You Have to Do
27
28. Our Clients are Varied
• Be fresh
• Be fun
• Be different to different folks
• Reinvent yourself and your message often
28
29. • Read article “Decision by Committee” from
Government Procurement magazine
Active role played by Procurement
Chair of selection committee
Provide instructions and support
Evaluate cost and other areas
Review and “own” the decision
Other considerations?
Leading Clients Through RFPs
29
30. • Push Paper
• “PaCS Essentials”
• “The Brief”
• Quick Reference Guide
• Web
• Website Overview – Static and Interactive
• Checking the Status of Your Project
• One-to-One Training
• Departmental Visits
• Departmental Training
• Flow Chart
• Group Training
• Training Days
• Merchant Expo
Tools We Use
37. • Paper Resources
• “PaCS Essentials”
• “The Brief”
• Quick Reference Guide
• Web Resources
• Website Overview – Static and Interactive
• Checking the Status of Your Project
• One-to-One Training
• Departmental Visits
• Departmental Training
• Flow Chart
• Group Training
• Training Days
• Merchant Expo
Tools UCSB Procurement Uses
37
49. • Value:
• Improved results
• Reputation
• Professionalism
• Proactive – It’s an investment!
• Other?
• Rules:
• Be Responsive
• Be Accountable
• Use Processes and Metrics
• Document, Report, Share, and Use Results
• Others?
Reaching Out to End-Users (Clients)
49
50. • Promoting Your Entity as a Potential Customer
• Prioritizing and Targeting Your Outreach
o Vendor Fairs and Open Houses
o Websites
o Advertisements
o Printed Media
• Collaborating with Other Entities
• Educating and Training New Potential Vendors and Suppliers
• Continuing Education for Vendors and Suppliers
• Working with Various Organizations of Suppliers
• Other?
Reaching Out to Vendors
50
54. • Increased Competition
• Higher Quality Responses
• Better Results for Your Agency, Clients, Your Entity
The Value of Reaching Out to Vendors
54
55. Read article on page 35 of workbook
Address questions on page 33
Cultivate Supplier
Relationships
55
56. • Courtesy - Polite, respectful and friendly personnel.
• Access - Approachability and ease of contact.
• Responsiveness - Willingness to help and provide timely service.
• Competence - Knowledge and skill to perform service.
• Reliability - Dependable and accurate service.
• Credibility - Trustworthiness of provider, service customers best interest.
11 Dimensions of Customer Service
56
57. • Security - Freedom from danger or risk
• Tangibles - Physical environment, equipment, appearance, visuals
• Communication - Informing customers of process and procedure
• Empathy - Individualized attention. Recognizing and building
relationships
• Diversity (Applies to all Dimensions) - Recognize the impacts each of us
can have on folks who have any aspects of difference from us
11 Dimensions of Customer Service
57
58. Communication!
Contract Administration Plan
Self-Administration/Self-Management
Checklists/Other Tools
3rd Party Software Tools
Business Reviews/Open Forums
Evaluations
Supplier Management
58
59. Contract Administration Plan
• Description
• Roles and responsibilities
• Period of performance/delivery dates
• Data and deliverables
• Testing
• Inspection and acceptance
• Warranty provisions
• Personnel requirements
• Special terms and conditions
• Watch list items/critical milestones
• Schedules and meetings
Supplier Management
59
61. Communication!
Contract Administration Plan
Self-Administration/Self-
Management
Checklists/Other tools
3rd Party Software Tools
Business Reviews/Open Forums
Evaluations
Supplier Management
61
62.
63. Ten Website Do’s and Don’t’s
Tips for Effective Web Design
Effective Navigation Guidelines
20 Tips for Effective Web-Copy
Example Websites
Balancing Technology
Utilizing Technology/Tips
for Electronic Outreach
63
64. Think about your site from your client's point of view.
Make your site navigation clear and foolproof.
Layer information intelligently and logically.
Keep your site simple.
Get unbiased, critical people you trust to look at your site.
Promote your site.
Website Do’s
64
65. Indulge in a slick, "flash" animation page before your homepage.
Use small, unreadable type, put type over images or "reverse"
type in white out of a dark background.
SHOUT when I'm right next to you. .
Boast, make overblown claims, or exaggerate.
Use slang, bad grammar or typos.
Website Don’t’s
65
66. Effective Web Design:
Fast Loading web site designs
Clear Navigation
Readable and Professional
Fonts
Minimize the use of Images
Check for Broken Links
Effective Web Navigation:
Organized Links
Intuitive
Clear and Prominent
Consistent
Easy to Understand
Menus
Tips for Effective Web
Design/Navigation
66
68. MBE – minority owned business enterprise
WBE – women owned business enterprise
ESB – emerging small business
DBE – disadvantaged business enterprise
HUE – historically underutilized enterprise
SWAM – small, women and minority
businesses
Valuing Diversity
68
69. Small Business Programs
Sheltered Market / Set-Aside Programs
Emerging Businesses Programs
Addressing Barriers
o Package projects appropriately
o Consider bonding and insurance levels
o Ensure pr0mpt payment
Goal Setting
o “Good Faith” and “Targets”
o Mandated Minimums
Working through the Market
o Incentives in IFBs and Contracts
o Incentives in RFP Evaluation Criteria
Valuing Diversity
69
70. Read case study, “Replacement of WBE Subcontractor”
After reading the case study, discuss the following questions and issues
with your group.
What should Eva’s Excavating do next? Contact company owner, county
project manager, state certification office, her attorney, or someone
else?
Do you think the prime contractor gave the WBE a fair shot at the work?
Explain why or why not?
What is the owner’s responsibility in resolving this situation?
Have you experienced anything similar to this on your own projects?
Diversity Case Study
70
71. Diversity and equity are part of fairness
Disparity studies evaluate a region’s contracting practices
to determine contractor availability and capacity vs.
contract awards
Reverse Vendor Fairs provide small businesses a chance to
meet with multiple agencies at one time (more efficient)
Diversity in Procurement
o Helps ensure level playing field
o Says that your entity and your agency care about equity and
the small business community
o Acknowledges the struggles of minority and women owned
business
Valuing Diversity
71
72. SOME QUESTIONS
• Are the procurement opportunities at my agency truly
available to all contractors?
• Am I doing all I can as a procurement professional to promote
a fair and open process?
• Does the diversity of my annual spend reflect the diversity of
my community?
72
73. ADVANTAGES OF DIVERSIFYING
CONTRACT SPEND
• Demonstrates a commitment to equity and fairness
• Complies with existing regulations and policies
• Promotes the economy by using local businesses
• Increases competition on your project
• Can result in lower costs by smaller company
• Prompts behavioral changes in large contractors
73
74. THOUGHTS ON
DIVERSIFYING SPEND
There are certain barriers you have to
overcome as a small growing business.
We want to grow so we can continue to
hire a diverse workforce.
Andrew Colas
President
Colas Construction
74
75. SMALL BUSINESS PERSPECTIVES
“The prime reduced the scope so much, we decided
against doing the job.” – Emerging Small Business
(ESB)
“Contractor would not break the work down to
economical portions.” - Minority Business Enterprise
(MBE)
“They only give us the work they don’t want to do.” -
MBE
75
76. SMALL BUSINESS PERSPECTIVES
“I was the low bid subcontractor with good references
and bonding capacity, but still lost the bid.” -
Minority/Women Business Enterprise (M/WBE)
“When the primes have to use Disadvantaged Business
Enterprise (DBE) subs, they do not want them on-site
performing permanent work. We are allowed to do
trucking, flagging, and temporary work. There is
nothing I can point to later and say that’s my work.” -
MBE
76
77. SMALL BUSINESS STATISTICS
77
• 65% of new jobs since 1996 have been created
by small businesses
• 52% of small businesses are home based
• 50% of the working population (120 million
individuals) works in a small business
• 28 million small businesses operate in the US
• 50% of small business start ups last at least 5
years
Source: Jason Nazar, Forbes
81. Capture data to in order to make
improvements
In client interactions, no one approach
will work
It’s all about the relationship
Printed material must be done well to
hit well
Electronic tools should be used, but
balanced in their use
Wrap Up – Top Ten
Lessons
81
82. Investing in customer outreach pays off
Practice excellence in customer service
– to all your customers
Leverage your program activities for
maximum effectiveness
Valuing diversity benefits us all
Measure and improve (suppliers and
processes)
Wrap Up – Top Ten
Lessons
82
