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

One basic goal of performance assessment is to encourage a supplier to align its performance with the organizational goals and objectives of the municipality or private sector client. There are considerable reasons to believe that performance levels improve simply because the supplier realizes that performance is being measured and evaluated. Other reasons for performance evaluation are to lead to more informed decision making about the quality of performance that can be expected of suppliers – both individually and collectively.

Measurement and evaluation can lead to the identification of hidden areas of waste and other cost drivers in the supply chain. By eliminating them, a municipality can reduce its order cycle time, and may possibility be able to reduce inventory levels. Risks can be identified earlier, and proactive steps taken at a time when there is good reason to believe that they may lead to problem avoidance.

Even if these improvements are never achieved, for obvious reasons, customers are concerned about the quality of service that 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 sufficient expertise to allow them to produce a complete picture of the municipality’s suppliers.

It follows that municipalities seeking to rely upon past performance must be able to overcome two difficult realities. First, to have any validity, performance evaluations must be systematic and fair, and based upon explicit criteria of which the supplier has notice. Key considerations include developing a reliable reporting mechanism and creating legitimate performance measures. The supplier must also be allowed to have at least some opportunity to respond to any assessment given.

Second, a major problem that many municipalities must overcome in introducing a scheme of supplier evaluation is to find the worker resources required to make the system work. In principle, a comprehensive system of supplier evaluation is worth the time and investment, because a considerable portion of staff time is currently invested in dealing with precisely the type of bush fire that a good system of evaluation will mitigate.

Unfortunately, such advice may be linked to the suggestion that the solution for the problems of the poor is for them to save more – it does little to explain how.

An assessment should consider the scope and nature of the products purchased from a supplier, the requirements to which the supplier was subject, the circumstances in which the supply was made and any 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 has noted:

“Canadians continue to expect government to manage tax dollars effectively 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 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 be related to the customer’s requirements, as set out in the specifications for the supply contract.

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.