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. PERSPECTIVES ON VENDOR
PERFORMANCE MANAGEMENT:
LET’S MITIGATE THE RISK
Vancouver 2012 Gerald Ford & Arthur Skuja
2. What is Vendor Performance
Management?
It is a business practice that is used to measure,
analyze, and manage a supplier’s performance
in an effort to cut costs, alleviate risks, and drive
continuous improvement.
The ultimate intent is to identify potential issues
and their root causes so that they can be
resolved as early as possible.
3. What is Audience Response
Technology?
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. Which image best describes how you feel
today…
1.
2.
32
3.
4.
5
2
0
1 2 3 4
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. Case Study: Ministry of
Transportation 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. 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. 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. MTO Vendor Qualifications
Qualifications based on detailed vendor information:
Financial assets
Financial liabilities
Business information
Litigation
Experience
Work on Hand
Equipment
Key personnel
11. MTO Vendor Performance
Management
Vendor contract performance evaluation is focused on
key parameters
Quality
Safety
Timeliness
Execution
Any performance issues reported immediately
Infractions
Warnings
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. 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. 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. How do you compare to MTO - which
sector are you in?
16
1. Municipal
2. Academic
(University/College)
3. School Board 8
4. Health Care 6
5. Broader Public Sector 4 4
6. Private Sector
1
7. Federal/Provincial 0
1 2 3 4 5 6 7
16. How many employees work for your
organization?
1 to 9
14
1.
2. 10 to 24
3. 25 to 99
4. 100 to 249 9
5. 250 to 499 7
6. 500 to 999
7. 1000 to 2499
8. 2500 + 3
2
1 1
0
2 3 4 5 6 7 8 9
17. Other than CPPC which Organization(s) do
you 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. Survey Says!
OPBA = Ontario Public Buyers Association
CPPC = Canadian Public Procurement Council
NIGP = National Institute of Governmental Purchasing
OECM = Ontario Educational Collaborative Marketplace
CMC = Canadian Association of Management Consultants
HSCN= Healthcare Supply Chain Network
19. How many competitive bids did your
group issue in 2011?
13
1. 1 to 49 11
2. 50 to 99 9
3. 100 to 149
4. 150 to 199
4
5. Greater than 200
1
1 2 3 4 5
23. Which tools or methods do you use?
Pick as many as you would like!
1. Checklists
17 17 17
2. Forms 16
15
3. Templates
4. User Guides & Manuals
5. Progress meetings 8 8
6. Performance
documentation
7. 3rd Party verification
1 2 3 4 5 6 7
27. Problems with Purchasing and Supply
Chain Measurement and Evaluation
Too much data
Wrong data
Measurements that are short-term focused
Lack of detail
Drive the wrong performance
Measures behavior vs. accomplishments
Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMP 27
Professor, Supply Chain & Operations Management
School of Business & Hospitality
30. On a scale from 1 to 5, what is the average score you
give to your contractors when you do evaluations?
1. Poor 13 13
2. Acceptable
3. Standard
4. Good
5. Excellent
3
2
1
1 2 3 4 5
31. Central tendency State of Florida
Overall Rating
70%
66%
5105 Surveys conducted in April 2010
60%
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
32.
33. Simplified 3M team rating (TQRDC)
T – Technology
Q – Quality
R – Responsiveness
D – Delivery
C – Cost
Courtesy: Jeff van Geel
Manager Sourcing & Accounts Payable
35. 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 & services
Courtesy: Jeff van Geel
Manager Sourcing & Accounts Payable
36. All information for exercise only
Courtesy: Jeff van Geel
Manager Sourcing & Accounts Payable
38. For ratings
that are
“Below
Standard”
and
explanation
must be
entered
Easy to create, fill out and explain!
39. The “below Standard” Comment
Easy colour
coding to spot
what needs to
be reviewed
quickly. Data
can be exported
for further
calculations if
required.
40. 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
42. What are your greatest challenges to
having 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
43. Is the use of bonding a viable alternative
to vendor performance management?
1. Yes 16
2. No
3. Depends 11
9
1 2 3
44. Do you share performance results with vendors?
1. Yes 25
2. No
6
1 2
45. Do you tie VPM data to proposal evaluations
and vendor selection?
1. Proposals
2. Evaluations 12
3. Both
8
4. Neither 7
2
1 2 3 4
46. Do you tie vendor qualification to
specific procurements or a general
work or product category?
21
1. Specific
2. General
3. Product Category
6
3
1 2 3