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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 several different types of assessments that may be carried out: Comparative versus discrete to a particular transaction; continuous versus milestone assessment; pre-contract 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 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 aspects of municipal procurement, assessment must be performed to the high standards of integrity that the public may expect of a public authority.

The basic objective of any supplier assessment process is to provide an underpinning for enhancing the quality assurance aspect of the supplier-customer relationship.

For obvious reasons, customers are concerned about the quality of service they are receiving. In many 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 other relevant or extenuating circumstances.

A balanced approach to assessment should be coupled with an appropriate contractual regime of warranties, bonuses and penalties.

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 towards an intended result, government officials need to have credible information on the performance of the programs and services they manage. This is the information they will use to determine whether the results they expect 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 complaint driven system, instances of dissatisfaction should be catalogued and classified to generate specific areas of concern.

These can then be related to the customer’s 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
• Identified problems with shipments received
• 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 practicable, use may be made of photos taken during the audit. In addition to the detailed report, a management summary, including a recommendation on the supplier’s suitability, should be provided.

Individual supplier performance is, of course, a critical consideration, because it relates to the satisfaction of the needs of an individual ordering department within the municipal organization.

Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com. Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.