PSB Delegation Consulting Ltd.

Have a Safe and Happy New Year!

noreply@blogger.com (Katherine Caughran) — Tue, 31 Dec 2013 22:45:00 +0000

**blows dust off this blog**
Hello again! It's been a quiet year here at PSB Delegation! Well, quiet on the website, we've been busy elsewhere this past year!

In reading a blog of someone I admire, I'm reminded of a tradition of "Ending as you mean to go on"... So I'm ending 2013, with a post to let you know, we're still here. We still love to fix and help, and teach and mentor all things procurement, supply chain, contract-related. We just didn't work on the blog/website/twitter/facebook side of things in 2013. I'm looking forward to reconnecting in whatever form makes sense in 2014...

So, enjoy yourselves this New Year's Eve, enjoy the New Year and we'll catch up later ;)

How Do You Contract Based on Vague Answers?

noreply@blogger.com (Katherine Caughran) — Mon, 08 Apr 2013 03:21:00 +0000

Recently a vendor asked for a copy of a winning proposal. I've learned this is normal for US vendors to do, but in Canada, not so much. In our discussion they came to realize there are two main reasons for this: Canadian protection of privacy legislation, and the RFP is a contract!

1) FOIPPA/PIPA/PIPEDA - these are the overriding privacy law in various parts of Canada - FOIPPA in the province of BC being the one I'm most familiar with. To release an RFP would require a Freedom of Information request; a timeframe for a response; and a great deal of time and effort on the part of an FOI officer to redact the information.
The flipside of this legislation is the proponent doesn't get to mark 'everything' as confidential and a proponent doesn't necessarily get notified if an FOI request has been made. Although many organizations do the courtesy of giving them a heads up, by law the information is to be released and the proponent cannot stop it. The information would have to be proven to be proprietary and marked as such before submission....and no, marking the proposal as 'confidential & not to be released without permission' does NOT override the law.

2) RFP Contract - in the US, the RFP is an advertisement; in Canada, the RFP is an offer. In responding to the RFP, proponents accept the terms/conditions of the RFP and form a contract with the buying organization. This means the buying organization has to play by the rules as set out in its document. That means the buying organization must score/evaluate the proposal against the weightings & criteria contained in the RFP. What some US vendors don't realize is their proposal is the 'final offer'; what is contained in their written proposal forms their evaluation score. There's no new information submitted 'later'.

In our vendor debriefing discussion, the US-based vendor admitted they keep their proposals 'vague' because of the number of times their proposals are released to their competition (in the US). As a result they scored much lower. It causes me to wonder: How does a buying organization make a procurement decision on a vague proposal? How does one evaluate if the response to the written criteria has no details?

noreply@blogger.com (Katherine Caughran) — Thu, 07 Feb 2013 02:03:00 +0000

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

Buying from local goods and services suppliers has many advantages, politically and economically. Senior Government legislation has mandated that public sector organizations must publically tender most procurement and not exclude suppliers from across Canada based on geographic location. We (too) often hear examples of tender awards to “out of town” vendors offering goods and services a little bit cheaper than the “local” supplier where all other factors are equal.

Or were all other factors considered? Let’s explore this sensitive issue.

Sr. Government Legislation – Agreement on Internal Trade (AIT) and New West Partnership Agreement (NWPA) are intended to reduce interprovincial trade barriers and enhance competiveness. Legislative goals are articulated and can be read here: http://www.newwestpartnershiptrade.ca/pdf/NewWestPartnershipTradeAgreement.pdf

School Districts, Post-Secondary Institutions and Municipalities have deep roots in their local economies and social networks. It’s a tough call to award business to “away” supplier when “local” supplier is equally competent but a bit more expensive.

Competition, however, is a good thing. If local supplier is complacent, away supplier will take their business. Local supplier can also expand its market by bidding goods and services in away supplier’s trading area.

The request to supply document will determine the process for selecting which supplier your organization will contract with. The tendering organization can state legitimate criteria (to the goods or services requested) additional to price for consideration when evaluating responses to their supply requests. The relative weighting of each criterion must be disclosed and the evaluation process should be quantifiable and defensible. Public sector buyers are often required to demonstrate that they are obtaining the best value from their selected suppliers to both taxpayers and losing bidders.

The development of a 100 km supply chain will require careful procurement planning, knowledge of the local marketplace and may be assisted through the provision of supplier development workshops. While not everything can be locally sourced, local suppliers of many goods and services can be every bit as competitive as the away suppliers when all legitimate factors are considered in the supplier selection process.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

We'll have what they're having...

noreply@blogger.com (Katherine Caughran) — Wed, 19 Sep 2012 16:52:00 +0000

An article popped up in my news readers this morning that scared me. An RFP was issued to privatize (outsource) a university health centre without sufficient investigation! The reason this scared me is the procurement/purchasing department had an amazing opportunity to provide value to the organization by facilitating research into the feasibility. In 2002-2003, my MBA consulting project was to investigate the feasibility of outsourcing the inventory management at a hospital. Part of my literature research indicated that outsourcing decisions needs a baseline and the best place to facilitate this is with the purchasing department... here's an excerpt of what I had found in my literature reviews:

Regardless of where the outsourcing idea originated, someone needs to conduct an in-house feasibility study, and solicit outside information before approaching an outsourcing decision. (McKillop, Barry, Outsourcing: Seminar Participant Notes, Purchasing Management Association of Canada, January 1996. pg 28). The feasibility study will include identifying what activities to outsource, assessing the current operations, identifying customer requirements, assessing human resources impacts, setting/evaluation of metrics, then taking that internal information and comparing to business process alternatives. (McKillop: pg32).

A comprehensive book on outsourcing recommended by the Institute for Supply Management, is “Strategic Outsourcing” by Maurice Greaver. Greaver provides a detailed process to approach outsourcing. Both McKillop and Greaver’s processes begin with identifying the area to be examined, proper planning, study and analysis. Within McKillop’s process, he identifies the key steps in the feasibility study as follows:

Obtain sponsorship from the top
Set objectives and deliverables to be met by the project
Define which function/process/activity to examine
Chart current situation using process mapping
Conduct financial cost analysis of the above process map
Interview users of the service
Benchmark the process
Define barriers/risks to outsourcing
Obtain outside information from suppliers/others who have outsourced

The two authors’ approaches differ on the point where the multi-functional team involvement begins. With McKillop, the preliminary work is done within the purchasing department, and a team is developed when the process mapping stage begins. A multi-functional team of customer representatives, process experts, functional, financial, legal and human resources representatives are required for the analysis stage.

What do you think? How did this RFP get issued without sufficient stakeholder involvement/feasibility/research conducted? Did the University officials push for the RFP to be issued? Did Purchasing not offer expertise to suggest further research?

OR is it better to have the marketplace tell you what you need when others have already done it (ie we'll have what they're having)?

Olympic Diving: Potential Approach for Proposal Evaluations?

noreply@blogger.com (Katherine Caughran) — Mon, 13 Aug 2012 19:06:00 +0000

I have an London 2012 Olympic hangover. For the last 16 days, my morning routine has been to get up at crazy early hours, turn on the television with my 7 yr old then make breakfast, coffee, etc while we watch all sorts of athletic events. I had my select favourites that I could not miss, but I learned some new things watching other events with my son.

For instance, diving... I noticed the numbers up on the screen with a few 'strike-outs' not understanding what that meant. I didn't understand the scoring nor why they had such huge totals. I then learned from the announcers/webpages: "Seven judges score the dive out of 10. The top and bottom two scores are discarded, and the remaining three scores are added together and multiplied by the tariff. Marks are based on a host of factors, including: take-off position, flight, performance of move and entry. The quieter the splash and the straighter the back, the better." This led me to wonder if perhaps we could do something similar for evaluating proposals?

Right now, an RFP evaluation book weights each individual criteria from the RFP (similar to the diving tarrif). Individual evaluators (judges) score the proposals (dives) against the questions. The next step is to meet for consensus for a final score - This is where we have some differences occuring - some groups will average all the scores (to save time/effort), whereas others will sit in a room for hours discussing each question until all come to a consensus. A hybrid of the two is to discuss only the 'outliers' for consensus & use an average for the rest.

Maybe we should consider discarding the outliers (highest/lowest) and adding the evaluators scores? Would this be much different than averaging?

What do you think? Keeping in mind the need for openness, transparency and fairness in the process...

--------
Ref: Tom Daley bids for Olympic Diving gold

Titling Your Requests for Supply

noreply@blogger.com (Katherine Caughran) — Tue, 03 Apr 2012 16:23:00 +0000

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

Supply managers have several different titles for their requests for supply. I think of different types of requests as being on a continuum between a Request for Proposal (evaluation criteria is strongly or entirely weighted on the solution proposed) and Request for Tender (evaluation criteria is strongly or entirely weighted on price). While there are several commonalities between these requests, there is a “gray” area of difference between these types of requests. I prefer to title requests where the nature of the supply is clearly specified, price is strongly weighted and where there are significant criteria to be evaluated additional to price a Request for Offer.

So what’s in a title?

Consistency with expectations will avoid confusion and add value to your procurement. The potential respondent to your request will provide a better response when they have a clear understanding of what you are asking for within minutes of opening your request. The qualified and reputable respondent to a tender invitation immediately knows to analyze their cost to supply and focus on tendering a competitive price. If, however the invitation to tender does contain other, more subjective evaluative criteria that need addressing, the respondent may become frustrated and not respond. Everybody loses.

A request for proposal is asking for proposals to deliver a desired outcome. The request will contain criteria to evaluate the solution proposed by the respondent. Price will be one evaluative factor amongst many and may be minimally weighted. The respondent immediately knows from the document title to set aside enough time to address several factors in preparation of their response.

The Request for Offer is the “gray” area between requests for Tender and Proposal. The product and/or services is reasonably well defined, however the requestor wants to consider, experience, reputation and possibly some innovative or alternate solutions to provision of the product or service.

Attaching the right descriptive title to your request provides an immediate indication to the respondent of your expectations. The respondent will schedule their time accordingly. The clarity in your title adds value to everyone.

RFP delays affect more than timeline...

noreply@blogger.com (Katherine Caughran) — Tue, 20 Mar 2012 16:21:00 +0000

Have you heard the one about "Cost, quality, time – choose two"? It's not a joke...if you manage a project it's a tricky balancing act. An RFP process is a project within a project and shouldn't be treated any differently. If you delay the posting but expect to have the contract awarded by a certain date, you should expect poor quality "rushed" proposals, higher costs or worse - a process that fails and needs to be reposted!

I've experienced delays in processes for different reasons but they fall within a theme (planning):

1) One of the stakeholders wants to delay so they can extend an existing contract or direct award due to "emergency" - failure to plan or circumvent the process is NOT an emergency.

2) End-users have difficulty translating their vision into a specifications document/requirements/statement of work. -need to have plenty of time built into timelines to facilitate discussions to build their requirements

3) Procurement was an "afterthought" and wasn't built into the project timelines - ie many people believe they know how to "buy" so figure they've done the work & posting an RFP is instantaneous - need to educate the end-users on what could negatively impact them with the process "as-is" vs what positive impacts Procurement's contribution will be (generally they'll call Procurement into the process earlier the next time)

4) Last minute scope/authority/political issues crop up - these affect the timing of posting in the best-case and a total rework of the requirements in the worst-case -we can't always prevent these but making sure all impacted stakeholders are involved or aware can mitigate this cropping up.

So, in the case of the 3 month delay of the Navy network - how do you see that turning out? Its great they are extending vendor contributions, but will the increased quality of specifications & keeping to same deadline result in a higher cost?

Marketing Your Requests for Bid

noreply@blogger.com (Katherine Caughran) — Tue, 13 Mar 2012 15:53:00 +0000

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

You have carefully prepared your RFP or Request for Tender document and consider it to be a great opportunity for a range of suppliers. You post it on a public bidding site such as BC Bid® or Civic Info® and wait for the responses to come rolling in.

If, as many do, you have a process that confirms receipt of the opportunity and you know that several good bidders have the documents – that is a good first step.

If you don’t have a process that confirms receipt of the request documents, you will not be able to gauge interest in your request. Even if you do confirm potential respondents, how do you know you have reached all qualified potential suppliers? There are plenty of excellent suppliers out there that do not log on to tendering sites looking for bidding opportunities.

You might be missing out on an opportunity as well. By doing some creative marketing of your request, you just might find the perfect supplier. Here’s an example: our facilities department was looking for someone to supply custom millwork. I prepared the request and then went looking for qualified responders. As a part of my search I called likely suppliers to millwork and cabinet shops. This led me to (among others) a small shop that did high quality work. He relied on word of mouth for business. I informed him and others of the posted bidding opportunity and how to get the documents. This shop became a valuable supplier to our facilities department providing excellent product for many years.

Creative marketing of your requests can include sending notice of your request to the likely suppliers of the type of supplier you are looking for. It is probable that they will know who the better suppliers are and pass along your information to them. Inform the local chamber of commerce and other pertinent associations that type of supplier may belong to as well.

Consider doing some supplier development in your community. A talk to the local Chamber of Commerce on how your organization sources its supply could provide you with an expanded range of competitive respondents to your next request.

More competitive responses to well constructed requests can mean greater value to organizations seeking the best available suppliers.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

The RFP Process WILL NOT Replace Good Contract Management

noreply@blogger.com (Katherine Caughran) — Tue, 06 Mar 2012 21:30:00 +0000

Most common question I'm asked of end-users when conducting a bid process:

Can we choose not to accept a vendors bid if the Vendor has provided poor service in the past or has poor references?

So, obviously the department has had this issue before...I need some background before I can answer:

- Did you document the performance issue(s)?
- Did you notify the vendor? (usually this is a condition within the contract)
- Did the vendor respond to the issue? Did it resolve the issue(s)? What happened as a result?
- Is all of this documented? Did it cause additional administration of the contract, additional expenses to hire someone else to rectify, etc?

Generally, the answer is "no, it wasn't documented; no, the vendor was never told", so obviously the vendor didn't have a chance to rectify the issue.

So my response is no, you can't disqualify the vendor as you have nothing to substantiate it and we could be sued for treating them unfairly.

Purchasing gets a bad rap from end-users who complain the process doesn't get them the best qualified vendor and are stuck with a low bid, poor performing vendor. As with anything, garbage in/garbage out - if we don't ask the right questions, specify the correct requirements, we don't get the right thing. BUT, at the end of the day, the RFP does not manage the contract, the contract manager does. This is a circular process, if a contract manager does not document/manage poor performance, then the next competitive process has no legal means to disqualify a poor performer. And to be fair, does one bad experience mean they aren't any good EVER? How often are we 'perfect'?

As for bad references, there's a whole host of legal cases related to subjectivity of disqualifying a vendor based upon a reference...best to seek legal counsel on that!

Finding Value in System Contracting

noreply@blogger.com (Katherine Caughran) — Tue, 10 Jan 2012 17:03:00 +0000

Image by NobMouse via FlickrAssociate Guest Post by Rusty Joerin of Woodsgift Enterprises

System contracts, also known as standing orders, open purchase orders or similar terms can add considerable value to your procurements. Reduced overhead, efficient use of staff time, standardization of product and volume discounts deliver value to the buyer.

System contracts are most frequently utilized for the supply of low cost items routinely and commonly used in the organization. Often referred to as Maintenance, Repair and Operating (MRO)category items, the value is delivered both on the price of the individual items and the processes surrounding and incorporated into the supply contract. System contracts can also apply to furnishings, fleet maintenance and software licensing amongst other goods and services.

System contracts provide great opportunities for co-operative procurements between several organizations. I managed the procurement of stationery and copy paper supplies on behalf of a number of public sector organizations that resulted in better volume discounts than could be obtained through separate contracts. With one organization leading the procurement process duplication of procurement effort across the group was eliminated.

Standardization adds value through reduction of inventory carrying costs, reduction of training costs in the use or installation of product and interchangeability of products throughout the organization.

System contracts can and should be longer term contracts. Three to five years with appropriate safeguards is reasonable. This provides a balance between competitive requirements and procurement process savings to be achieved.

Next time – some things to consider when writing contracts for system type procurements.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Yet Another Countdown...

noreply@blogger.com (Katherine Caughran) — Tue, 03 Jan 2012 16:53:00 +0000

Tuesday, January 3rd, 2012. Government offices are back to regular working hours again. In Procurement, its the calm before the storm. Just like the mad rush of shoppers on Christmas Eve, Government year-end spending comes just before March 31st every year. Returning from winter holidays means there are merely 12 weeks and 3 days for the public sector to commit (spend) any remaining budget funds they may have.

Although the budget approval process starts in September the year before (ie the business plans for capital and programs are submitted in the Fall prior to the start of the new budget year) you will find procurement is only 'called' at the moment the program area is ready to go to RFP.

Timelines will be short, as the RFP needs to be "on the street" from 2- 5 weeks, depending upon the complexity and value. Evaluations will take another 2-3 weeks depending upon the schedules of the evaluators, and the number of responses required. In order to commit the funds, the contract needs to be signed before the year-end and delivery made.

So, dear vendor, at this time of year, when you send in a request to extend the closing date of the RFP - don't be offended, when the request is summarily refused. What I would suggest, rather than stating you need more time, explain WHY it is necessary that the marketplace has more time to provide complete materials that will shorten contract negotiations and expedite delivery, in a manner that would 'save time, money & scope creep' for the buying organization.

Wishing you a Wonderful 2012

noreply@blogger.com (Katherine Caughran) — Sat, 31 Dec 2011 18:36:00 +0000

Image by AlicePopkorn via Flickr2011 is almost packed away, and being curious, I googled 'business resolutions' to see what writers, businesses, advisors were recommend for the coming year. Instead, I found an article written at the beginning of 2011, which I find to be good advice for any year: Your 2011 Guide to Business Resolutions

I wish all of you a wonderful new year filled with abundance, joy, and treasured moments. May 2012 be your best year yet!

Issues That Bind

noreply@blogger.com (Katherine Caughran) — Tue, 08 Nov 2011 17:30:00 +0000

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

This is the third in our series entitled Find, Bind and Mind Your Suppliers.

The first thing to remember is that as you bind your supplier, so you bindyourself (or more properly your organization). As a result of some recent court decisions concerning the formation of contracts resulting from the solicitation of offers to supply, procurement professionals have explicitly stated in their requests that no contract will be formed until such time as an agreement to supply is reached with the best respondent. This statement will also apply to the respondents who also will be under no obligation to contract with you, although there is a presumption they will because they responded. I suggest that this clause be used with care and not be attached to every request. This issue is complex, still evolving and well beyond the scope of this message. Be aware of this issue, monitor the latest legal developments and seek expert advice.

There are situations where you definitely want to bind all respondents to a request to supply. Bid bonds have long been used as a tool to ensure that the preferred bidder will contract with you, even if they have second thoughts after bid closing.

I once experienced a situation where after a prequalification process one of the shortlisted firms backed out midway into the second phase of a high value, complex RFP which decreased competition by a third. For subsequent projects and with expert advice, we extended the bid bond process to ensure that all short-listed proponents to similar high value complex procurements were compelled to submit a viable proposal. In short the binding process was advanced a step.

Depending on the procurement, suppliers can be bound by the request document, contract terms presented in the request to be included in any subsequent contract or by reference to an industry standard document with supplementary conditions given in the request document.
The joy in all of this is that you, the buying organization, get to decide what the terms of engagement will be. My advice is to ensure that the terms are fair, which encourages competition and so that a resulting contract becomes a beneficial relationship for both parties.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

You want to CANCEL the RFP!?!

noreply@blogger.com (Katherine Caughran) — Tue, 01 Nov 2011 16:56:00 +0000

I had a client contact me after they felt a process they had conducted had 'failed': In the sponsor's mind, the RFP was flawed because they felt they received many unqualified responses, and thought the evaluation system did not result in being able to hire the best qualified partner. They had numerous vendors contacting them and wanted to speak to me on how to proceed:

My initial response was as follows:

1) If proponents are contacting you directly, you should be redirecting them to the contact person on the RFP (you can tell proponents that the optics would make it appear they are lobbying)

2) To cancel a process and then redo, we need to give a reason to the vendors that will not make it appear that 'the wrong vendor won' - vendors spend approximately 100 man hours on their proposals. It's even worse if presentations were done because a 'failure in the process' should have been clear prior to the presentations. By canceling and redoing, the short-listed proponents will have reason to believe the process is being 'fixed'.

3) To cancel the process & redo - it would be better to state scope has changed from original requirements - or qualifications/experience requirements have changed due to the outcome of a related project (but I'd question: why wasn't that considered in the first place???)

4) Risk - in the public sector, the process may be FOI'd and audited because of a cancellation/redo - from my review, the process did exactly what was asked for, so an auditor would seriously question why the process was cancelled.

5) Quality of responses - the quality of responses is a direct result of the quality of the RFP/criteria issued. If the RFP was vague and/or unclear, responses will be vague & unclear. If technical specifications were weighted more heavily than solution based requirements, then it would make sense a technical firm would likely score higher. If the solution is more important, don't weight the technical know-how higher!

What exactly failed in the process?

The end-user (sponsor) had a picture in their head that no-one knew about. As well, the end-user didn't know the full market to predict how different types of companies could respond to what was asked. The procurement team could have avoided this by asking more directed questions of the sponsor instead of passively having the sponsor sign off on the RFP criteria.

Luckily, having worked with this client on a variety of other projects, we knew how to meet the needs WITHOUT cancelling the RFP - the 'technical firm' remained the winner, but the project went forward with supplemented solution/skills from the client department.

Find the BEST Suppliers

noreply@blogger.com (Katherine Caughran) — Tue, 25 Oct 2011 17:23:00 +0000

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

This is the second instalment of the Find, Bind and Mind your supplier’s series. This month I address finding the best suppliers of goods and services, ones that are of strategic importance to your organization. These suppliers have to be reliable, competent and efficient, in short best in class.

You may come to know of their existence through trade shows, your personal network such as referrals from colleagues in your business sector or from suppliers you trust. On-line business network services are a potential first step, but proceed with caution and perform proper due diligence. Some very competent specialty suppliers operate “off the grid”. I more than once found such a supplier who when contacted first asked me how I found him. I told him that I found him by contacting customers likely requiring his services and obtained their recommendation. That information gave both him and me confidence that we could successfully do business.

The first step in finding a supplier is determination of requirements. The next steps may lead to an advantageous refinement of those requirements.

Procurement professionals utilize a number of tools to find a supplier, the applicability of which will depend on the particulars of the situation.

Market sounding strategies will inform the buying organization about the depth and maturity of the supplier marketplace for your requirements. Formal requests for information and requests for expression of interest can when properly managed provide a great deal of information with a minimum of procurement risk.

Best practices for market sounding include assurances of confidentiality, concurrent direct invitations to potential suppliers with public posting of request documents on industry boards and clarity in writing the document.

The commencement of a supply relationship is reciprocal. The best suppliers will choose their customers carefully too.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Marketing & Purchasing

noreply@blogger.com (Katherine Caughran) — Tue, 18 Oct 2011 17:25:00 +0000

For the last few months, an executive recruitment firm has been trying to fill a position "Manager, Commercial Purchasing & Marketing". I initially thought it an odd combination for a single position at that level.

I believe there are major benefits to marketing & purchasing working together. Purchasing has always needed to market itself to other departments to support their efforts, and purchasing can build its strategy early if they know the expected outcomes from various initiatives. Marketing also needs to build its strategy over time, thus making sense to have the two departments working together, but in my mind, they'd have separate managers, reporting into a single director or VP.

The two disciplines of Marketing & Purchasing are very different. Marketing appeals to the emotional side of buyers, builds relationships to support its company branding & sales. Purchasing builds relationships with the company suppliers but is to remain 'neutral' and cut through the marketing "fluff" to ensure supply is effective, efficient and economical. I definitely would want purchasing to understand what marketing's strategy, approach and forecasts were going to be for my organization, BUT, my fear of having a marketing person in charge of purchasing would mean spending my organization's capital & operating funds using the same emotions they use to sell the brand.

Am I distilling Marketing to emotion-based action and Purchasing to thinking-based action?

Agree/disagree? I welcome comments!

Find, Bind and Mind Your Suppliers

noreply@blogger.com (Katherine Caughran) — Tue, 11 Oct 2011 17:04:00 +0000

Associate Guest Post by Rusty Joerin of Woodsgift Enterprises

Quite some time ago during a contract management course the instructor (thank-you Robert) summed up purchasing’s responsibilities as finding, binding and minding your suppliers. While these continue to be essential activities of procurement much has since changed in the context and processes of their application. Procurement managers are expected to contribute to the refinement of organizational procurement related processes and to ensure that their functional strategies support the organization’s strategies.

I consider strategic management to be the alignment of all activities to support the mission, goals and values as articulated by the organization’s leadership.

Finding a competent supplier that really understands what you need and will deliver your requirements in a superior manner requires hard work. Finding a supplier begins with defining your needs and communicating them in such a way that is understandable to a range of competent suppliers willing to compete for your business.

Binding your supplier is more than signing your or their contract form. If contract terms are not satisfactory then it is unlikely you will find let alone bind a competent potential supplier. Marketplace knowledge and negotiation skills are required of the procurement professional.

Minding your supplier should not be an afterthought. Good relationships require planning, understanding and more hard work. Contract terms are not a substitute for good relationship management.

I will discuss issues related to finding, binding and minding suppliers in the context of strategic procurement management in future editions of Better Value Procurements.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.

Information about his experience and qualifications may be found at:www.woodsgift.com

Ignorance is Bliss (?)

noreply@blogger.com (Katherine Caughran) — Sun, 25 Sep 2011 21:40:00 +0000

Image via WikipediaThere is a model for learning called "conscious competence" - Go ahead and read the article, google the term and you'll see many dissertations of its application. Simple summary: there are four general areas: "I know what I know", "I know what I don't know", "I don't know what I know", and "I don't know what I don't know". This last one (first in the stages of learning) I find is the most dangerous in the corporate world. Many people who "don't know they don't know" operate under the assumption that they do, in fact, know. We see this all the time in procurement where end-users believe they know how to buy the goods & services they 'want', and believe procurement and legal advisors are over-reacting to 'potential risks & consequences'.

I was reminded of this on a recent exchange between individuals on a local freecycle.org page. The premise of freecycle is to keep items out of the landfills by offering it for free to anyone willing to come pick it up. Last week someone posted 2 child car seats, stating he just saw them at the side of the road with a free sign on them. After people raised concerns over the age & safety of the seats, his reply was "Despite concerns over the safety of older model car seats (that, IMO, deal with retail sales), the two seats had been picked up by someone this morning" That started a few more public emails flying about talking to insurance companies, Fire departments, or Emergency staff about what happens when old/expired car seats are used. Basically, it became a debate of "opinions".

What absolutely, no-one mentioned (publicly at least) was the fact, we here in Canada have a law that covers garage sales and giving away of certain items, including car seats:

http://www.hc-sc.gc.ca/hl-vs/iyh-vsv/prod/used-usages-eng.php

"Under Canadian law, certain products cannot be sold or even given away if they do not meet the safety requirements of the Hazardous Products Act. The Act outlines safety requirements for certain consumer products, many of which are intended for use by children. The Hazardous Products Act and Regulations do not distinguish between new and used products."

The whole group, in how this discussion played out, were expressing (heated) opinions, but didn't know what they didn't know: the law. (The moderator now has the above links to update the local site guidelines).

The risk? "If you sell an item that is hazardous, you could be liable in a civil court of law." or, having to live with someone being hurt due to lack of safety information, or at the very least, an extended debate of opinions and 'flame war'.

Should buyers worry about how long it takes to pay suppliers?

noreply@blogger.com (Katherine Caughran) — Tue, 19 Jul 2011 15:59:00 +0000

Image via WikipediaAre your 'internal processes' affecting your relationship with your suppliers? Do you know what happens when your suppliers attempt to get paid for their goods & services?

The vendor relationship does not exist only in contractual interactions with the team. Nor does it end when you negotiate a contract for as, if and when requested goods & services. A very simple and KEY area that can make/break a relationship is PAYMENT TERMS. If your firm doesn't pay on time, or worse, makes it complicated for a vendor to get paid, you will end up paying for it later...

Here's a case example: a meat processing equipment distributor in Ontario had a contract with a national chain of supermarkets, to supply selected equipment to chain stores within the province of Ontario. The specifications and pricing were set, and individual stores would select from the list as required. Orders were placed/delivered in Ontario, but the purchase order & payment would come from a centralized department in the East Coast. The 'draw-down' process worked like this:
- meat manager would select equipment from the list
- store manager would approve
- the store would give a 'heads up' to the distributor as they wanted the equipment by a certain date
- order would be sent to centralized purchasing to issue a purchase order so the system could issue a cheque
(note sometimes, the purchase order would not arrive until weeks later which created its own complications)
- equipment delivered to store, delivery slip signed by receiver
- original delivery slip was attached to invoice and sent by mail (as instructed by finance)
- once the invoice arrived 4 days later in accounts payable, it was put into a pile for processing
- copies were made, coding stamped and documents sent back to the store manager in Ontario for approval (4 days via mail)
- once approval was signed/mailed back, accounts payable would enter the invoice in the system for payment within 30 days of the date of entry into their system (note we've lost at least 2 weeks already)

The vendor thought they'd try to speed up the process by having the store manager stamp/sign the delivery slip at delivery time - it took a bit more effort to track down the store manager, but at least the approval was on the slip before mailing an invoice. They thought it would save the extra back/forth mailing of the documents, and cut 2 weeks off the process...

It didn't help - the accounts department put coding on the delivery slip and wanted the store manager to approve THAT too (even though the code for the equipment was always the same - all of this was standardized in the contract negotiations).

This is an industry that would scan barcodes to tally up someone's grocery purchases, manage its ordering and inventory via EDI, yet needed original documents and Canada Post for approval of delivery & coding of items that were pre-selected by a centralized department, at a pre-negotiated price.

Guess how the price negotiations went the next round...

Does Anyone Care if I'm Certified?

noreply@blogger.com (Katherine Caughran) — Mon, 11 Jul 2011 16:25:00 +0000

I've been delinquent in renewing my Purchasing Management Association of Canada (PMAC) annual membership. If I don't renew, my SCMP certification (Supply Chain Management Professional) will expire. For our annual business forecast & budget, I decided to question all expenses (as we do for clients), so I've been debating the benefit to being a member and maintaining my certification. (Rationale: I have an MBA so is the certification necessary?)

Of all my past & current employers and clients - only one has REQUIRED that I be a member seeking/holding certification...and that was for my first purchasing job. My manager was a wonderful mentor (and if you ever goto a PMAC National event, seek her out - Donna Lee Reid - Dufferin/Peel Catholic School Board - she's incredibly smart). Donna introduced me to the concept of 'networking' - because of Donna, I see the purchasing/supplychain/logistics profession as a group of peers ready & willing to help each other out. Whenever I need to buy something 'new to me', I contact someone who may have done it before to seek advice (Most of whom I've never even met in person!) Everyone has been willing to share their experiences & expertise.

From there, I 'educated' my next employer(s) on the benefits of the PMAC training and membership - I negotiated a deal that I'd save them more than they paid in my tuition (in actuality, I always 'earned' my annual salary in 'savings').

In later years, a director told the staff the certification meant "nothing" to them, but a business degree (especially an MBA) made more sense. As I crept up the ladder, strategy was more important than tactical thinking, but, the PMAC education went through phases to build strategic thinking, so yet again, I needed to 'educate' my employers and clients.

I completed my certification in 1999, back then it was called CPP (Certified Professional Purchaser)...in the last year, it's been rebranded as SCMP (which personally I think better reflects the education/experiences I've had in the profession). So with a new certification brand, I have to 'yet again' educate my clients (no its not a new certification, it's a rebranding of what I've always had..). So for this year's forecasts/budget, I had to question the benefits of my "Membership Dues".

Being a member does not get me discounts on Errors & Omissions insurance (that I require for government clients); nor does it lobby/educate government & corporations on the certification requirements as well as other associations do for their members; nor am I finding courses I want to take this year at a member discount. So what does my membership get me? Networking opportunities that perhaps I wouldn't have if I weren't able to open with "I'm a fellow member of PMAC"; I have fond memories of the program, and still keep in touch with fellow 'live-in course survivors'; I receive lots of 'free' trade magazines as a result of being a member and even if the clients/corporations don't understand the certification, some actually do put it in their requirements; there's opportunity for me to be a course instructor; I receive emails/calls from students in the program when they see my certification...

Perhaps the certification isn't about the education, courses & discounts per se, but instead its about what you do with it. I love teaching, and one of my dreams was to be one of the instructors for the final "live-in course". Perhaps it's like a marriage - I stuck to this through the good and the bad...I'm committed to seeing this through (I think I'll go write a cheque now)

What do you 'require' of your professional associations/memberships?

Supply Strategy in the Public Sector

noreply@blogger.com (Katherine Caughran) — Thu, 07 Jul 2011 21:36:00 +0000

Image via WikipediaGuest Post by Rusty Joerin of Woodsgift Enterprises

Public sector supply is a tool used to advance the goals of public institutions. A municipality planning to increase downtown density by permitting taller buildings may wish to upgrade fire protection equipment. Construction of roads, bridges and the purchase of new jet fighters are all the result of strategic decisions designed to advance the goals of the governments of the day. Supply professionals will adopt strategies that support goals set by policy makers.

Public supply operates in a fish bowl. It matters not if a village or national government all supply strategy will have as its foundation transparency and the highest ethical behaviour. This is essential to receive the best value from your suppliers.

Public supply may be used for local community and economic development even in the context of national and international trade agreements. A small town wishing to increase local employment in tourism may partner with a resort developer; a province wishing to nurture secondary manufacturing may mandate inclusion of manufactured products from its natural resources in the buildings it contributes payments for. Supply managers will adopt strategies compatible with the policy goals set by government.

A critical function of government is preparation for emergencies. These range from a broken water main or house fire to a war and everything natural or human made between. The supply manager’s strategy is to prepare and plan for the expeditious supply of goods and services as may be required yet respectful of constraints placed on the public purse. Strategies that build relationships and trust with key suppliers of emergency supplies are essential.

Strategic Supply Management is a learned skill. Two organizations I am familiar with and can recommend as providers of supply management training are:

BC Institute PMAC http://www.bcipmac.ca/ and
NECI http://www.neci-legaledge.com/

Enjoy your Summer, see you in September.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.
Information about his experience and qualifications may be found at:www.woodsgift.com

Two Sides to Every Story...

noreply@blogger.com (Katherine Caughran) — Tue, 05 Jul 2011 16:45:00 +0000

Time and again I have end-users tell me "I want to score the reference checks to be sure we get someone that does good work"

My response ends up being "reference checks are not relevant (to score at least)". I don't believe references are the ultimate test of whether someone does good (or bad) work.

Anyone who submits references is ONLY going to send in their best client references. Would you 'knowingly' submit a reference that was unsatisfied? So for scoring purposes, you end up having references all getting high scores.

As well, the people contacted for a reference check seldom provide 'critical information' as they want to avoid being held responsible for someone NOT getting work because of how their comments are 'scored'.

Generally we use references for verification of what is stated in the response, and if anything is 'off' we use it as means to disqualify (as long as we've stated that purpose within our RFP!).

A alternative approach that a colleague uses is to state within the RFP "we reserve the right to contact client references NOT named within proposal for the purposes of..." that may help you get you a fuller picture, but again, there are always two sides to every story - I have a wealth of examples where people were dissatisfied with a contractor, but never gave feedback/managed the contractor during the course of the work. So a 'bad' reference may have never given the contractor an opportunity to fix the issue.

Good or bad, the reference checks are only giving you a piece of the story...

Social Media "Experts": How well could you answer these RFP Questions?

noreply@blogger.com (Katherine Caughran) — Fri, 10 Jun 2011 18:31:00 +0000

In 2009, a public sector organization issued an RFP for a social MARKETING campaign (they knew back then that social media in and of itself wasn't enough to raise awareness to their cause). The proposal questions & evaluation criteria are below. Do you think this criteria is now irrelevant? Is there anything new that should be considered?

How would you and/or your hired consultant/advisor/"guru" stack up to this criteria?

Note: being public sector, the organization had to evaluate carefully as they are spending YOUR (taxpayer) dollars....does your organization use the same scrutiny for selecting expertise that ultimately spends YOUR money & time?

--------------

Being this is an emerging area of expertise, ABC encourages suppliers to submit questions in writing for any information that will assist in providing better proposals for evaluation.

Submissions shall include, but are not limited to, the following components:

1) A brief description of your firm’s approach, resources and timeline for each of the project stages:

Stage 1: Develop the project strategy and action plans.
Stage 2: Research the target audience’s current understanding, beliefs, attitudes, perceptions and motivating factors related to Y.
Stage 3: Develop the social marketing plan with performance measures.
Stage 4: Develop, test and produce any creative components.
Stage 5: Implement and evaluate the web campaign.

2) An overview of any required ABC staff involvement – although there is a staff member assigned to this contract, that person will not be available to the project on a full-time basis.

3) An overview of proposed forms of social media to be considered for the ABC campaign, and why these media forms would be relevant.

4) A brief overview of your firm’s experience and expertise in social marketing. List clients with a general description of services your firm provided and results achieved.

5) A minimum of three client case studies for social media campaign services. Provide the role of your firm, the goal of the campaign, what your firm implemented, what obstacles were encountered, how your firm managed obstacles/issues, and outcome of the campaign (or measurements to date).

6) An overview of the forms of social media used by the firm in past projects (technologies, applications, grassroots networks, NOT ad buys).

7) A list of the consulting team members who would be assigned to this contract and their CVs outlining relevant roles, experience and education.

8) An overview of your firm’s ability to work with messaging created by other advertising or media firms. Note: ABC may have contracts competed for other requirements that may or may not influence this project (i.e. updating the ABC website; event management; advertising for events, etc)

9) A price quote and all pricing options available to support the requirements of the ABC campaign. The price should include

upfront costs (if any), what is included in upfront costs, and deliverable associated with the costs;
Hourly rates for consulting team members, and estimated time commitments of each team member to the project
Costs for each stage/deliverables associated with each.
Estimated expenses and details on what these expenses include.
Prices quoted must be in Canadian Dollars.

10) Name and contact information for two clients with similar project requirements to be used as references.

Criteria for assessing proposals
ABC will apply several criteria to assess the submitted proposals. In brief, these criteria include:

Criterion 1: Approach (50%)

Clear description
Addresses project objectives
Identifies necessary resources

Criterion 2: Demonstrated capacity to do the work (30%)

Relevant knowledge, skills and experience

Criterion 3: Cost (20%)

ABC is a not-for-profit agency publicly funded by the Ministry of X. Fees must represent good value for quality of services rendered.

Better Value Procurements: Supply Stability

noreply@blogger.com (Katherine Caughran) — Wed, 08 Jun 2011 19:38:00 +0000

Guest Post by Rusty Joerin of Woodsgift Enterprises

Planning and effective contract management will ensure supply stability and avoid supply complacency. Things change, are you prepared?

Long term system contracts for the supply of standard products and services are a common method to achieve stable supply for a set period of time. Progressive organizations will incorporate in these contracts process for semi or annual review. A review will consider service level conformity to contract as well as price administration. Changes in volume may trigger negotiation of some terms as may be allowed for in the original contract. A spend analysis may identify opportunities for savings and greater supply stability.

Disruptive events will occur that may precipitate a supply crisis to the unprepared. Contingency plans to cover labour disruption, the loss of a key relationship manager or natural disaster that interrupts the chain of supply should be made. Even with our best efforts, not every situation will be anticipated, nor should it be. What is important is that an agreed process to manage disruptive events be addressed in any long term supply contract.

Time is your enemy, time is your friend.

Plan to make time your friend. Organizations that had “shovel ready” projects benefited from the recent time limited stimulus spending on infrastructure projects.

I am all too familiar with end of budget year spending that may not provide the best value to the organization. Annual needs analysis at budget time followed by early consultation with your procurement professional will deliver better value and supply stability – every time.

Complacency with supply contracts is not an option. When knowledge is shared between buyer and supplier, balance of power is maintained. Always know what you buy and when. This knowledge is critical when managing changes in long term supply contracts.

Supply stability is the result of planning, effective contract management and is in everyone’s best interest.

Rusty James Joerin, SCMP is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply.
Information about his experience and qualifications may be found at:www.woodsgift.com

Organizing my Random Thoughts on #Procurement & Supply Chain

noreply@blogger.com (Katherine Caughran) — Tue, 07 Jun 2011 17:58:00 +0000

I've been inconsistent (to say the least) with posting my thoughts on this blog. The original intention was to offer tips and create better understanding between the buyer & supplier sides of Procurement & Contract Management. This was to be an extention of the stories I told within my NECI classes.

The problem, however, is that I've written articles geared to suppliers (which is still helpful for buyers to see the other side), AND I've written articles geared to buyers (which also is helpful for suppliers to see the other side). I don't want to confuse things, nor aggravate those who only want to read 'one side' (although we should talk about why you'd only want to see one side....)

So, I have some options -
1) post a note on each article as to who it is geared towards;
2) pick a single audience and stick to it (I really don't like this option)
3) write more broadly to encompass both sides
4) write Tips for Buyers on Tuesdays; Vendor Tips on Friday (Vendredi)

So, if anyone is out there 'listening' (other than the spammers who keep targetting the credit card post) - please let me know your thoughts in the comments!

PSB Delegation Consulting Ltd.

Have a Safe and Happy New Year!

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We'll have what they're having...

Olympic Diving: Potential Approach for Proposal Evaluations?

Titling Your Requests for Supply

RFP delays affect more than timeline...

Marketing Your Requests for Bid

The RFP Process WILL NOT Replace Good Contract Management

Finding Value in System Contracting

Yet Another Countdown...

Wishing you a Wonderful 2012

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