PSB Delegation Consulting Ltd.

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

Why the RFP Is Antiquated | The PRagmatist [Digg]

Digg — Mon, 07 Nov 2011 18:25:05 PST

The challenge with trying to complete a Request for Proposal is that the prospective client has already thought-through their needs for you and you have to plug your services into their template, which means you automatically start at a disadvantage.

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!

Hands on Experience Counts...doesn't it?

noreply@blogger.com (Katherine Caughran) — Wed, 01 Jun 2011 03:50:00 +0000

I've heard of some scary 6 week, multi-stage hiring processes - resume (documenting education, experience, achievements) then a phone/pre-screening; an initial interview; a written test; and sometimes further interviews to test the ability/competency of the individual to ensure 'the best fit'.

When seeking advice of consultants, advisors, experts, etc, are you putting them through the same scrutiny? (or even a fraction of that scrutiny?)

In the private sector, I saw far too many managers buy into glossy brochures & sales pitches to mean "these guys know their stuff", only to find out too late, "these guys have never worked in this area before".

People may complain, but for public sector projects (over a certain threshold), an RFP requires 'applicants' to document & submit their relevant Experience, Education & Capability for evaluation. The RFP should outline minimum requirements to meet before considering approach/methodology and price. In many cases, the end-users want someone who has 'done this before' so they aren't paying someone to 'learn their business' (taxpayers wouldn't be too impressed either). The biggest issue I find, however, is too many RFPs state the requirement as "experience providing similar services", or "providing X services to organizations of 'similar size & nature', which unfortunately are too vague.

What would you define as "similar"?

Would you hire a consultant who has experience in organizing a "cocktail & cause" party for 200 guests as having 'event management experience' for your charity's annual major fundraiser event?
If you are in a research organization, would you consider someone who has written successful IT services proposals the same as someone who has written & received foundation grant funding?
If you want a website for your organization, do you want the expertise of a branding firm, or the newly graduated student who knows all the 'latest & greatest IT Tools'?

There are many individuals & businesses with great expertise in their industry, and time and again, I see many attempt to cross into other industries so they can expand their portfolios. Some have great success applying their knowledge to new, expanded areas...then there are the ones who "know what they know" but "don't know what they don't know" and are unwilling to consider the differences between industries/niches. If you don't define your requirements for experience (let alone ask about hands-on experience)...will you be happy with the expertise you receive?

How are you scrutinizing the experience of your advisors?

Revenue Generation vs Expense Reduction

noreply@blogger.com (Katherine Caughran) — Tue, 24 May 2011 17:25:00 +0000

My husband and I both love to help non-profits. He has spent a number of years on the marketing, event management side to generate more funds (revenue), whereas I've been on the logistics/purchasing side (expense reduction). However, in our experience, a large number of organizations spend a great deal of their efforts on lobbying government for more funds or 'exhausting their donors' by repeatedly going back to the same 'small' group. When a new capital campaign is required, few, if any, non-profits look for new alternative revenue streams nor (gasp) expense reduction. A Review of job postings on CharityVillage.com shows all the NPOs looking to fill positions for revenue generation, and not a single one for expense reduction (procurement).

I'm reminded of one of the basic principles of purchasing "the profit impact of purchasing" (from "Purchasing & Supply Management" Leenders, Fearon). A reduction in costs, go directly to the bottomline, vs an increase in revenue generally is paired with an increase in expenses...

or to look at it another way, as the Georgia Center for Non-Profits puts it "every $1 spent on pencils, Post-It® Notes, computer keyboards or printing by a nonprofit equals $11 that must be earned via fundraising."

So, how does an understaffed nonprofit reduce expenses? Operate like a corporation:
1) Stop buying retail - get yourself a corporate account with business discount for the 'basket of goods' small dollar items such as stationery, printing, etc.

2) Streamline your ordering process - it costs you money to send staff/volunteers to go to the local printer, buy pens, etc - consider the time/wage/gas cost before sending someone out to run errands.

3) Negotiate contracts for repetitive purchases - rather than having to obtain quotes for each and every time you need someone to do a mailout, print a brochure, etc - look to your historical volume and negotiate a contract for 1-3 years of service.

There are lots of ways that a nonprofit can benefit from operating like a business...far too many items to list all at once - watch for future posts :)

Do you have a tip for nonprofits to reduce expenses? Add it to the comments below:

Sustainable Procurement Policies for Specific Commodities

noreply@blogger.com (Katherine Caughran) — Wed, 18 May 2011 02:36:00 +0000

While researching sustainable procurement practices for a client (back in November 2010), I ran across a variety of resources that are beginning to specify sustainable procurement practices by specific commodity. These organizations had an overarching 'general' sustainable procurement policy and guidelines, but also provided details on how to purchase sustainable commodities as specific as furniture. The details would balance sustainability principles (triple bottom-line) against business needs, taking into account the:

entire life cycle cost of the product.
quality required by the specification, bearing in mind the sustainable issue. These need to be both client driven and through the ethical procurement values of the suppliers.
availability of the product.
functionality of the product in the environment to which it is to be applied.
effect the product will have on the environment when in service.

(This came from research and practices being established by City of Richmond, Province of Nova Scotia, Queensland, Australia, and the United Nations Environment Programme (UNEP) to name a few)

Why have a policy by specific commodity? The sustainable procurement process will include Life Cycle Costing; establishment of standards & criteria for sourcing environmental & socially responsible suppliers; establishing VOC criteria as well as considering the 'best value for money' vs the typical "low price". To purchase sustainably, other criteria in addition to price need to be assessed.

According to the UNEP report I ran across, 20% of the evaluation weighting should be based upon sustainable criteria.

So, considering how much effort your facilities' department put into gaining Leed Certification, its time to get rid of the Request for Quote if you wish to purchase sustainable furniture for your new Leed Certified offices.

Related Links:
UNEP Background doc Furniture pdf
UNEP SP-Guidelines-Users-Guide-final.pdf

Better Value Procurements: Project Closure

noreply@blogger.com (Katherine Caughran) — Tue, 10 May 2011 15:25:00 +0000

Guest post today by Rusty Joerin of Woodsgift Enterprises

A project can be anything from a commodity purchase to a long term supply of goods and services or construction project.

Closure is important; it is the foundation upon which future projects are built.
For your suppliers that did not get the contract from your last request, closure may come in the form of the de-briefing interview. I always do these verbally and preferably in person. I won’t reveal the contract price but I will state where that vendor ranked overall amongst the other respondents. I will share my interpretation of the strengths and weaknesses of their offer or proposal. I will not reveal confidential information. I want that vendor to bid on future projects and to know that their effort is valuable to my clients and have confidence that they were and will be treated fairly and with respect.

The buying organization will also want to square the circle of procurement. I suggest that a process to collect and retain for reference a written appraisal be implemented in every organization for every significant project. A check list could include: quality of product and service, depth of supplier’s knowledge and resources, and most importantly how problem situations were handled by both parties.

The responsibility for collecting and retrieving this information is often a part of the procurement function. The ability to access this information by those who need to know is as critical as its confidentiality may be. It is important that this information not leave the organization in the head of a retiring employee. The written record becomes the resource for institutional learning.

The bottom line: did the project and the process to procure it advance the organization’s strategic goals and how, or if not, why not? What improvement can be made for the next project?

When planning your next project look first to prior experience with similar projects.

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 for those organizations with purchasing specialists on staff.
Information about his experience and qualifications may be found at:www.woodsgift.com

Fairness in the Process - Now or Later?

noreply@blogger.com (Katherine Caughran) — Tue, 03 May 2011 21:34:00 +0000

In the aftermath of the Gomery report, many organizations have started using a "fairness" role with their large complex or politically sensitive procurements. The primary objective of involving fairness resources is to provide objective evidence that the process has been run in a fair, open and transparent manner. Having the role start with the process keeps the process ontrack and saves time later, versus the standard waiting for complaints and having someone audit the process 'after the fact'. I've done both roles a number of times, partly to deal with the perception of bias towards incumbents; alleviate union concerns of outsourcing, ongoing vendor relations issues, etc. Thanks to close contact with National Education Consulting Inc & the Legal Edge publication means keeping up-to-date with the latest/greatest court decisions.

Even in cases where RFPs are better developed (in terms of how evaluations would occur) with an incumbent in place, it might be useful to request a fairness advisor/monitor/auditor play a role. Generally, the procurement department itself doesn't hire the fairness role (as it is reporting on their conduct/process!) Personally, I believe a fairness role needs to be appointed by an assurance department or a higher authority. There are even 'little things' that should be considered in the course of 'fairness' such as having all the evaluators sign a disclosure agreement (much like how the vendors are to provide within their proposals). I sat in on an evaluation process where the chair did NOT request this, and the evaluators went through a dozen grant application proposals and it wasn't until they faced the last proposal, one evaluator disclosed his son worked for the firm and would recuse himself from that evaluation - which was good to do, HOWEVER, he was involved in the scoring/discussions on all the competitive proposals up until that point! That is still a conflict of interest, even if he wasn't going to play any role in the scoring of that last proposal, he influenced the other scores. The organization changed their practices for future evaluations, and dealt with the issue by awarding to 'all' grant applications received - eliminating the risk of breach of process. I've been in other processes where the evaluations had to be 'tossed' and a second evaluation had to occur.

Is this more bureaucracy? Red tape to an already onerous process? How do you think the fairness can be 'above reproach'?

Comments/discussion appreciated

Surprise, surprise we've issued an RFP!

noreply@blogger.com (Katherine Caughran) — Thu, 28 Apr 2011 17:11:00 +0000

I was working with an IT Team for an RFP where one of the stakeholders (formerly a consultant) stated that in his former company, "if they found out about an RFP when it hit the street, they wouldn't bother responding". The vendors didn't feel they had enough time to understand the buyer's needs AND to build a comprehensive response to the RFP (traditionally they don't get enough time to do so). As well, they figure their people needed to build a relationship with the buying organization to 'truly' understand their needs.

The buyer's view was in order to be fair, no discussions should be occuring in advance of the posting. To keep a level-playing field, everyone must receive the information at the same time, and that means when the RFP is posted. Back-door discussions with vendors would taint the process, and could create mis-perceptions of bias.

But what is fair? Complete & utter secrecy until the RFP is public, or giving vendors a chance to prepare for an upcoming competition?

I don't want to start agreeing with vendors who try to 'get in the back door', scoping for info their competition doesn't have, but I do believe vendor relationships are strained (at best) if they are surprised by an RFP. It's bad enough most organizations spend months building a business case for buying a service, then 4 weeks drafting a solicitation document to end up giving the vendor community the minimum amount of time to respond "because they are in a rush". If you cannot give the vendors enough time to respond (they should get the equivalent amount of time it took you to build your solicitation), then at least give a public heads-up so they are prepared for the timing of the RFP.

Why? Take a look at this example of a relationship gone wrong, "Disagreements unravel popular music festival" the RFP was a complete surprise to the incumbent vendor; template language was obviously used if the vendor saw his 'intellectual rights' were to be handed over; and end-result: no-one responded and the media is talking about it. Finger pointing doesn't solve the issues.

So, no, don't disclose your criteria, nor solicitation details, nor meet with 'potential' vendors, but please consider giving a heads up when you need to do a competitive process - it'll make your process more successful.

Breaking Down Compliance w Procurement Policy Directives

noreply@blogger.com (Katherine Caughran) — Tue, 19 Apr 2011 18:53:00 +0000

Image via Wikipedia

Last week I posted a link to the Ontario Broader Public Sector Procurement Directive/Accountability Act. With an implementation date of April 1, 2011, smaller, independent public organizations are finding themselves having to implement corporate-sized procurement rules ‘off the side of their desks’.

How do you approach implementing something this complex without a corporate procurement department? Break it down into smaller components:

1) Understand the rules – make sure you are aware of what you can/cannot do, what your dollar thresholds are. Single page “cheat sheets” are helpful reminders to staff as to what path to take when they determine a need for a good or service.

2) Explain your process – both internally and externally. It is easier to be transparent, when everyone understands what you are procuring, how you will be doing it, what will be evaluated, and when.

3) Disclose your evaluation criteria – one of the keys to the trade agreements is disclosing the high level criteria for evaluation, and the weightings. Some organizations go further to disclose it on ALL procurements to be clear to all potential vendors (and to eliminate the internal confusion of ‘when do I need to disclose this?”)

4) Ensure all potential vendors have the same information – another key trademark to transparency and fairness. Make sure that any information that an incumbent may have is available to other bidders in order to level the playing field. As well, disclosing whether there is/is not an incumbent gives the vendor community the ability to decide whether it is worth their time to respond.

5) Keep an audit trail – in the name of transparency, and to withstand an audit of the process – keep documenting every step of the process, maintain a complete file from specification building through to contract award. This includes drafts (leading to a decision), email communications, faxes, proposals, evaluation books, signed declarations, letters/notifications of award. It may seem bureaucratic, but it makes life much easier at the end of a process to have a complete file in one place. Maintaining notes during the evaluation also helps for debriefing unsuccessful vendors without having to go back and re-read their proposal and evaluation score sheets.

6) Posting time – The minimum solicitation posting time of 15days is read by the vendor community as “you already have made your choice & are just doing a process to meet policy requirements”. Consider how much time it took you to build your specifications/statement of work and process? If the good/service is highly complex and your project document was built over a number of months – better quality responses will take longer than 15 days.

7) Be consistent – Ensure your processes follow the same path each time. There’s nothing worse than changing the rules, and then changing the way you do things at every turn.

8) Form of agreement w RFP – posting a copy of your resulting contract with your solicitation will greatly reduce the negotiation time as it will form part of your process. Depending upon the wording of your solicitation document (most Canadian public sector templates are based upon the non-negotiated RFP), vendors, by responding with a proposal, have accepted the terms and conditions of your contract attached.

9) Contract management tools – policy changes will affect your existing suppliers as well as smaller companies that haven’t bid on large contracts in past. Providing a sample invoice, contract documentation checklist, and monitoring reports will assist both your internal contract management efforts and compliance on the part of your vendors/contractors.

10) Debriefing - consider this a means to educate and build a stronger vendor community. The more vendors understand your process & how you evaluate proposals, the better the proposals & competition. PLUS, ask for feedback from the vendors as to how well you communicated your requirements; what additional information would they have wanted/needed. Improving the procurement process for future in addition to improving vendor proposals is a win/win for everyone.

noreply@blogger.com (Katherine Caughran) — Fri, 08 Apr 2011 23:39:00 +0000

Frequently Asked Questions: Ontario Broader Public Sector Procurement Directive http://ping.fm/dwRyF

What is the PSBDelegation Daily??

noreply@blogger.com (Katherine Caughran) — Wed, 06 Apr 2011 15:01:00 +0000

I am a visual person, which means I retain information better/more readily when I see it as opposed to hearing it or working within it. So, although my twitter lists are words scrolling past my eyes, a service called Paper.li caught my attention and I'm loving it. You can see a bit of the daily headlines down at the bottom right of my PSBDelegation website

Paper.li by Small Rivers will take your twitter or facebook feeds and turn it into a daily or weekly newspaper. It took some tweaking, but I now have a daily 'newspaper' that focusses mainly on procurement & supply chain, with some fun stuff, education, & science thrown in. My feed comes from a twitter list of procurement tweeple I built & continually adjust to include those tweeple I find provide me with the best content/access to breaking news in my area of interest.
How does it work?

First, I have my twitter list - I have 79 tweeple on it that I adjust depending upon their content.
I setup my first Paper.li PSBDelegation Daily after 10:30pm at night, so inevitably, my daily is produced by paper.li at that time - so its a recap of the day's links to those of us in the North American timezones, and a morning read in the UK.
Only those tweets with a link are considered in their algorithm (see their faq here) - the paper is made up of the visuals from the links people put into their tweets.

That's what I love about this - I'm getting a quick view of the links twitter people post without clicking unless the 'headline/photo' grabs me - much like reading a newspaper.

An additional benefit is my paper.li daily tweets who the 'top stories' were contributed by, so in essence, I'm RT'ing a select number of tweets from that list/twitter stream at the end of the day. I hope it helps people seek out and follow some of these tweeples - I wouldn't be following them if I didn't enjoy reading their tweets!

Set up a Treadmill Desk [Digg]

Digg — Mon, 17 Jan 2011 19:50:51 PST

Just because you have a desk job doesn't mean you need to watch your waistline grow year after year. If you can walk, you can use a treadmill desk. It's a...

The 10 rules of painless procurement - from both sides | The Real Projects blog [Digg]

Digg — Mon, 15 Nov 2010 11:50:31 PST

Blog entry with 20 things to think about from both sides (supplier and client) when preparing and submitting tenders.

PSB Delegation Consulting Ltd.

Finding Value in System Contracting

Yet Another Countdown...

Wishing you a Wonderful 2012

Issues That Bind

Related articles

Why the RFP Is Antiquated | The PRagmatist [Digg]

You want to CANCEL the RFP!?!

Find the BEST Suppliers

Marketing & Purchasing

Find, Bind and Mind Your Suppliers

Ignorance is Bliss (?)

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

Does Anyone Care if I'm Certified?

Related articles

Supply Strategy in the Public Sector

Related articles

Two Sides to Every Story...

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

Related articles

Better Value Procurements: Supply Stability

Organizing my Random Thoughts on #Procurement & Supply Chain

Hands on Experience Counts...doesn't it?

Revenue Generation vs Expense Reduction

Sustainable Procurement Policies for Specific Commodities

Better Value Procurements: Project Closure

Related articles

Fairness in the Process - Now or Later?

Surprise, surprise we've issued an RFP!

Related articles

Breaking Down Compliance w Procurement Policy Directives

What is the PSBDelegation Daily??

Set up a Treadmill Desk [Digg]

Top 14 Business Books To Read In The New Year Voted By You! | WomanzWorld [Digg]

The 10 rules of painless procurement - from both sides | The Real Projects blog [Digg]