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How sacrosanct is the 'evaluation criteria' in a sourcing project?

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If you have been a buyer, have you come across a situation where the score card clearly recommended a particular vendor, but the management decided to select another vendor....

 
If you are a seller, have you come across a situation where you were certain that you were ahead in the race by a mile, and at the last moment, some other vendor walked away with the deal, and the client desperately tried to convince you of the decision, owning to subjective factors such as 'cultural alignment' and 'synergy with existing relationship'? And if you have been a buyer, have you come across a situation where the score card clearly recommended a particular vendor, but the management decided to select another vendor, due to similar reasons?

Such situations often reflect the weakness of the 'evaluation criteria' or the process, or both. For each sourcing event, an evaluation criteria is developed beforehand, parameters listed, weightages assigned and sourcing team scores each vendor on those parameters. The criteria includes all subjective parameters too, and should anyway take into consideration all such aspects, as per assigned weightages. So, if any one parameter swings the deal at the last moment, it means that the weightages have been tampered with, or the evaluation criteria has been kept aside in the process. In any case, it is not a fair process and the Procurement person should challenge this and handle it appropriately.

What should be done to avoid such situations? Usually such situation happens when a certain stakeholder was not aligned in advance, and he or she disregards the evaluation criteria eventually. So, time and effort should be spent to identify all relevant stakeholders early on in the process and align them on to the evaluation criteria. The other reason for such a situation is when a certain parameter appears very important to the stakeholders later, while the score card doesn't give it the due weightage. So again, time and effort should be put in early on to ensure that the weightages are correct and reflect the intent of the process fairly.

What should a Procurement person do if such a situation arises? Fairness and transparency is the cornerstone of any sourcing process. If it is felt that the evaluation criteria is recommending a certain vendor unexpectedly and the 'favourite' vendor is scoring low, Procurement person should stand by the evaluation criteria and challenge any suggestions which dilute the sanctity of the score card. If however, certain aspect of the criteria was genuinely wrong, then it should be recorded in alignment with all stakeholders. Similarly, if management wants to over ride the score card due to 'relationships' or 'cultural' or any other such reasons, it again should be recorded for fair audit purpose. In no situation should the evaluation criteria be modified retrospectively, to accommodate a certain vendor.

Would like to hear from the procurement and sales community if they have encountered such situations and what did they do to handle it!


Comments

Prudent people and congruent, fair practices only can lead to Sacrosanct in sourcing projects. You are right in your analysis therefore Khalid. Very topical and refreshing thoughts indeed.

In my own experience, in very polite words, I decline them to consider an unexpected source due to the process is very close to finalize and I am able to consider the new source in the next process or opportunity

I would like to link the maturity level of the Procurement function as well as it's position within the overall company with the situation which has been described by Khalid in his blog. Hence, in my experience, the lower the maturity level of the Procurement function or the lower level Procurement is positioned as a business function within the company the higher the number of occasions where final supplier awarding is being deluded. Hence, in my view it is Procurement's own obligation to ensure the business is following a structured and transparent supplier awarding process towards it's supplier markets.

How true Khalid ...absolutely agree! Going back to the drawing board makes us realize how important it is to identify, understand and align the key stakeholders in a CF team or the business.

Sometimes I’ve been asked a very pointed question by business stakeholder. “Aren’t you (procurement function) promoting bureaucracy by adding complex processes and steps in sourcing project which otherwise would have been a simple supplier selection process”

This blog is a perfect answer to why these steps are needed.

Not only in sourcing projects but it’s very important in any project that milestones are clearly defined and signed-off by appropriate owners. To prevent “I changed my mind” type of discussion later.

Using Ariba Sourcing Pro or equivalent tools functionalities and opening up all big sourcing projects for audits, can filter out such "post bid" change of heart, mind biased decision and make them wide open. Name and shame letter from CEO's office to such stakeholder and / or buyer regularly can act as deterrent in times to come. There are solutions available, just that either stakeholders get too influential or sourcing team fails to deliver needed commercial objectivity.

I have come across this situation in many of my previous lives. Often, highlighting the critical risks of going ahead with the 'favorite' vendor to the C-level stakeholders forces them to think twice. In such instances, 'lets us review and comeback'alone is a mini win for the buyer!

It is the standard Process for all projects. Agree with your great thoughts!

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