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

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

5. Things less painful than an eight minute survey

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

20. How many competitive bids did the
Town of Oakville issue in 2011?
180

21. On average how many vendor performance
evaluations do you do per year?
14
1. None
2. 1 to 10 10
9
3. 11 to 25
4. 26 to 49
5. 50+ 4
0
1 2 3 4 5

22. Survey Says!

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

24. Which tools or methods do you use?

25. What triggers an evaluation?
1. Periodic 19 19
2. Budget Threshold
3. Contract performance
4. Project profile
5. New vendor 11
10
6. Project complexity 9 9
8
7. Client Dissatisfaction
6 6
8. Repeat vendors
9. Length of Engagement
10. Every Project 1
1 2 3 4 5 6 7 8 9 10

26. Survey Says!

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

28. Examples of Automated Systems
TQRDC
VPM

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

33. Simplified 3M team rating (TQRDC)
T – Technology
Q – Quality
R – Responsiveness
D – Delivery
C – Cost
Courtesy: Jeff van Geel
Manager Sourcing & Accounts Payable

34. 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

37. ABC Contracting Grand River Ford’s
Excavation Landscaping

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

41. Survey Says

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

47. 1. Construction – Commodity - Contract
2. Contractor - Consultant
3. Consistency - Customizable
4. Crowdsourcing – Collaborative - Comments
5. Compare - Contrast
6. Credible – Context
7. Cost

48. And how do you feel now?
1.
2.
18
3.
4. 6 6
5
1 2 3 4

50. Gerald Ford CSCMP Arthur Skuja
grford@csolutions.org askuja@merx.com
905-296-4003 613-727-4917
226-474-1169