Supplier assessment plays an important role in supporting corporate strategy.
Especially where outsourcing is employed, it serves as a critical reality check as to whether strategic targets are being achieved.
It is also essential in promoting supplier compliance with agreed performance targets.
Conceptually, there are a number of different types of assessments that may be carried out: comparative versus discrete to a particular transaction; continuous versus milestone assessment; pre-contact assessment, which incorporates the process of pre-qualification of suppliers; assessment during supply; and post-supply assessment.
To achieve optimal results, supplier assessment must be carried out using a rigorous methodology and diagnostic feedback must be provided to a supplier, both to ensure the fairness of the process and to allow it to adjust its performance in accordance with perceived inadequacies.
Assessment activity should be properly recorded so that a periodic audit of the process (or any particular instance of assessment) can be carried out to demonstrate whether that assessment was carried out fairly.
As with all other aspects of municipal procurement, assessment must be carried out in a fair, open and transparent manner.
Municipal procurement assessment must also be conducted to the highest standards of integrity that the public may rightly expect of a public authority.
The basic objective of any supplier assessment process is to provide an understanding for enhancing the quality assurance aspects of the supplier-customer relationship.
For obvious reasons, customers are concerned about the quality of service that they are receiving.
In a great number of cases, however, an anecdotal approach is taken towards this important question.
A more rigorous approach measures supplier performance against a standardized set of criteria that (so far as possible) are capable of objective measurement.
For best results, it is advisable to use only experienced assessors who have a sufficient enough range of expertise and information available to them to produce a complete picture of the municipality’s suppliers.
An assessment should take into account the scope and nature of products purchased from a supplier, the particular requirements to which the supplier was subject, the circumstances in which the supply was made and any other relevant or extenuating circumstances.
As the federal auditor general has noted:
“Canadians continue to expect government to manage tax dollars efficiently and to ensure that they are getting value for their taxes. To manage public resources effectively toward an intended result, government officials need to have credible information on the performance of the programs and service they manage. This is the information they will use to determine whether the results they expected are being achieved and whether their programs are working well or need to be modified.”
While the preparation of performance reports should not degenerate into a system that is complaint driven, instances of dissatisfaction should be catalogued and classified so as to generate specific areas of concern.
These can then be related to the customers’ requirements, as set out in the specifications for the supply contract.
Relevant areas of concern include:
Processing of order
Timetable for delivery
Completeness of delivery
Time required to make good on back-orders
Condition of goods on receipt
Time required to correct those problems
Comparison of individual supplier results with those of other suppliers furnishing similar goods or services
Identification of potential areas of improvement for the supplier.
Based upon such an assessment, it is possible to generate a detailed report of audit findings covering management, facilities and adequacy of the supplier’s quality management system. Where it is practicable, use may be made of photographs that were taken during the audit.
In addition to the detailed report, a management summary including a recommendation on the supplier’s suitability should be provided.
Stephen Bauld is a government procurement expert and can be reached at email@example.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.