Post on 25-May-2015
description
Supply Chain Risk and Performance Monitoring:
The use of automated systems to help you manage key areas of your
organization
2012 Annual Conference Presentation
Which sector are you in?Pick one!
1 2 3 4 5 6 7
20 0
3
31
11
1. Municipal2. Academic
(University/College)3. School Board4. Health Care5. Broader Public Sector6. Private7. Federal/Provincial
Survey says
Municipal
Academ
ic (Unive
rsity/
College
)
School B
oards
Health
Care
Broad
er Public
Secto
r
Private
Company
Federa
l/Pro
vincia
l Gov't
Other0%
10%
20%
30%
12%
10%
7%
11%
16%
22%
14%
8%
How many Canadian employees work for your organization? Pick only one!
1 2 3 4 5 6 7 8
0
2
8
12
7
3
4
3
1. 1 to 92. 10 to 243. 25 to 994. 100 to 2495. 250 to 4996. 500 to 9997. 1000 to 24998. 2500 +
Other than OIPMAC which Organization(s) do you belong to?
Pick as many as you would like!
1 2 3 4 5 6 7 8 9 10
4
0 0 0
24
8
5
1
00
1. OPBA2. CPPC3. NIGP4. OECM5. CMC6. HSCN7. Construction Association8. ISM9. Other10. None
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
How many competitive bids did your group issue in 2011?
1 2 3 4 5
20
1
9
00
1. 1 to 492. 50 to 993. 100 to 1494. 150 to 1995. Greater than 200
How many competitive bids did the Town of Oakville issue in 2011?
180
On average how many vendor performance evaluations do you do per year?
Pick only one!
1 2 3 4 5
3
22
6
23
1. None2. 1 to 103. 11 to 254. 26 to 495. 50+
Survey Says!
Which tools or methods do you use?Pick as many as you would like!
1 2 3 4 5 6 7
17
11
20
7
23
17
6
1. Checklists2. Forms3. Templates4. User Guides & Manuals5. Progress meetings6. Performance
documentation7. 3rd Party verification
Which tools or methods do you use?
What triggers an evaluation?
1 2 3 4 5 6 7 8 9 10
15
5
18
3
2
3
6
13
6
191. Periodic2. Budget Threshold3. Contract performance4. Project profile5. New vendor6. Project complexity7. Client Dissatisfaction8. Repeat vendors9. Length of Engagement10. Every Project
Survey Says!
Why Measure Performance?
• Support better decision making• Support better communication• Provide performance feedback• Motivate and direct behavior
15Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
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
16Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Performance Measurement
• Effectiveness– Extent to which, by choosing a certain course of
action, management can meet a previously established goal or standard
• Efficiency– Relationship between planned and actual
sacrifices made to realize a previously agreed-upon goal
17Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Metrics Key• SPECIFIC• MEASURABLE• ATTAINABLE• RESULTS ORIENTED• TIME-BASED
18Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Develop Specific Measures
• Objectivity• Clarity• Use of accurate and
available data• Creativity
• Directly related to organizational objectives
• Joint participation• Dynamic over time• Non-manipulative
19Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Measurement System Characteristics• Effective measurement requires consistent and reliable
data• Periodic review of measurement system to …
– Eliminate unimportant or unnecessary measurements– Add new criteria as required– Reevaluate objectives or targets– Objective versus Subjective criteria
20Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Measurement System Characteristics
• Measurement is not free• Not all aspects of performance lend themselves to
quantitative measurement• Purchasing and supply management is better served
by a few precisely defined and thoroughly understood measurements
21Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Measurement and Reporting Frequency
• Reporting frequency to buyer– Day-to-day performance for troubleshooting and
expediting• Reporting frequency to supplier
– Routinely summarized monthly or quarterly– Annual face-to-face meeting
• Never delay reporting supplier’s poor performance
22Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Uses of Measurement Data
• Identify poor performing suppliers• Support supply base optimization and rationalization
efforts• Determine future purchase volume allocations• Identify performance improvement opportunities• Make sourcing decisions
23Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Supplier Performance Management
• How does buyer know how well any given supplier is performing?
• Consists of methods and systems to collect and provide information to measure, rate, or rank ongoing supplier performance
• Acts as supplier “report card”
24Leopold Koff, B.A., B.Ed., CPSM, CPM, CSCMPProfessor, Supply Chain & Operations ManagementSchool of Business & Hospitality
Working with ContractorsWHAT IS THE PURPOSE OF A CONTRACTOR PERFORMANCE
EVALUATION?• To ensure that contracts stay on track• To deal with issues and problems as they arise• To develop a relationship with contractors and an
understanding of what is expected• To document poor performance to alleviate the never
ending cycle
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Steps to Good Performance Management
• Establish and implement procedures for review of performance problems and/or disputes
• Have a consistent ranking system and procedure – follow it!
• Conduct regular inspections-project managers• Have written report, minutes, notifications
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Documenting Performance• The MOST crucial part of performance management• Weekly site meetings – up date the contractor on
upcoming issues or problems that have occurred. Get feedback from the contractor on how he feels the contract is going – take his suggestions to heart.
• Distribute site meeting minutes as soon after the meeting as possible
• Ask the contractor to note any exception to the minutes in an email or memo.
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Documenting Performance
• Any performance issues MUST be discussed with the contractor
• Contractor give reasonable time to correct the issue• DOCUMENT all issues – copy contractor on all
documentation• Suggestion: Two part report form – initialed by
contractor• Never put yourself in a position where the contractor
can say, “I had no idea!”
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Types of Documentation• Contract Check List
– Details deliverables and project milestones• Observation Record
– Document observations of Contractor Performance• Complaint Record
– To document and follow up on complaints• Discrepancy Record
– To note contract discrepancy, copy to contractor with expected actions.
• Field Diary– Used to keep track of daily records – be careful what you write.
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Types of Documentation
• Summary Evaluation Report– This is the contractors formal evaluation. – Conducted annually and/or upon completion– Reports can be done more frequently for
probationary or problem contractors– All notes and documentations are attached– Meet with contractor to discuss final outcome
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Contract Management
• Be flexible• Exercise sound judgement
Contracts are not held together by forms, surveys, diaries or other monitoring tools – but by the contract team!
Effective contractor monitoring depends more on the skills of the MONITORS than the monitoring methods
• A delicate balance of time and money vs the potential for disruption a service delivery.
Kim Dooling, CPPBManager, Purchasing and Risk ManagementFinancial Planning
Examples of Automated Systems
RAQS
TQRDC
VPM
On a scale from 1 to 5 what is the average score you give to your contractors when you
do evaluations?
1 2 3 4 5
0
32
17
121. Poor2. Acceptable3. Standard4. Good5. Excellent
Central tendency State of Florida
>= 1.00 to <= 2.80 >= 2.81 to <= 3.20 >= 3.21 to <= 5.000%
10%
20%
30%
40%
50%
60%
70%
3%
66%
31%
Overall Rating
Overall Rating
5105 Surveys conducted in April 2010
Ministry of Transportation Ontario
MTO uses the Registry, Appraisal & Qualification System (RAQS) to manage vendor qualification and vendor performance for infrastructure procurement
RAQS is an integrated solution with support for:• MTO user roles • Process workflows• Internal system interaction• Internal and external communications
RAQS Key Functional Areas
– 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
Simplified 3M team rating (TQRDC)
T – Technology
Q – Quality
R – Responsiveness
D – Delivery
C – Cost
Courtesy: Jeff van GeelManager Sourcing & Accounts Payable
Courtesy: Jeff van GeelManager Sourcing & Accounts Payable
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 GeelManager Sourcing & Accounts Payable
All information for exercise only
Courtesy: Jeff van GeelManager Sourcing & Accounts Payable
1.Construction – Commodity - Contract2.Contractor - Consultant3.Consistency - Customizable4.Crowdsourcing – Collaborative - Comments5.Compare - Contrast6.Credible – Context7.Cost
7 C’S FOR CONSIDERATION
WWW.CSOLUTIONS.ORGWWW.CMC-CANADA.CA WWW.DOINGBUSINESS.MGS.GOV.ON.CA/
VISUAL PERFORMANCE MANAGEMENT
ABC Contracting Grand River Excavation
Ford’s Landscaping
FILLING OUT EVALUATION
• For ratings that are “Below Standard” and explanation must be entered
Easy to create, fill out and explain!
Easy colour coding to spot what needs to be reviewed quickly.
Data can be exported for further calculations/analysis if required.
1 2 3 4 5 6 7 8
25%
8%
10%
5%
15%16%
4%
17%
1. Effective communication throughout engagement
2. Quality of resources3. Availability of resources to carry
out contract4. Quality of the final deliverables5. Providing value added services6. Maintaining timelines/deadlines7. Budget/cost control8. Having a vendor contact for
dispute resolution
WHAT IS IMPORTANT FOR AN EFFECTIVE CONTRACT?
Survey Says
What are your greatest challenges to having an effective VPM!
Pick more than one!
1 2 3 4 5 6
30
25
9
15
4
15
1. Not enough time2. End user input difficult to
get3. Poor systems4. Not required5. Missing linkage between
contract and performance6. Comparative Consistency
Do you share performance results with contractors - consultants?
1 2
9
27
1. Yes2. No
Do you tie performance management data to proposal evaluations and selection?
1. Yes2. No
1 2
9
23
52
COMMENTS – CONCERNS - CONFERENCE
CONTACT – CALL - COSTING
Gerald Ford CSCMPgrford@csolutions.org
226-474-1169905-296-4003
53
Leopold Koff CSCMPlkoff@conestogac.on.ca
Kim Dooling CPPBKDooling@oakville.ca
Corporate sponsors