Last week, I had the pleasure of presenting a three-hour workshop on purchasing best practices at Corporate United’s SYNERGY conference. One of the best practices that I dissected was the use of commodity teams.
Don’t miss updates on Procurement & Supply Chain, Subscribe here!
A very common method that commodity teams use for supplier selection is the use of weighted average supplier scoring. This is where you determine the various criteria used to identify the best suppliers, rank the criteria in order of importance, and assign a numeric weight to each criterion that is proportional to its importance in deciding on the right supplier.
Several of the attendees had successfully used this approach. However, an interesting debate broke out.
Some of the attendees said that they regularly disclose to the suppliers the criteria and weightings that are being used. Others said that are more careful with sharing that information.
The proponents of sharing said that doing so helps the suppliers really focus on what is important and try hard to impress the decision-making team on those most important aspects of the potential relationship. The opponents of sharing said that it has the exact opposite effect – suppliers will look for ways to not concede as much in areas that are not as highly weighted.
Personally, I have always shared the criteria but not the weightings because I found that losing suppliers tend to try to pick apart the mathematical computations when you give them a courtesy of a debriefing, as opposed to using the feedback to constructively identify ways that they can improve their business. Plus, I do feel that if price accounts for 30% or less of the total score, suppliers will not be as aggressive in their pricing and, let’s face it, cost savings is often the most important key performance indicator on which a procurement department is measured.
Having said that, I definitely feel that the concept of sharing or not sharing criteria and weightings is a matter of personal preference rather than something that should be standardized for all organizations.
What’s your preference?
Click on the comments link below to share your thoughts on this matter.
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
Earn Your SPSM® Certification Online At
Next Level Purchasing . com
Comments
This question comes up time and again whenever I conduct training on supplier selection. For private sector I almost always recommend sharing the criteria and listing the criteria in order of importance. This way prospective proposers know what is important, but don’t have the benefit of the actual percentages in order to manipulate the math.
For government clients, it is a requirement that the criteria be given and listed in order of importance. Most government agencies also disclose the weights, although that is not mandatory.
Great discussion topice!
In my opinion, there’s the high level criteria weightings (that I recommend sharing) and then the individual question weightings that we DON’T share.
1) For the high level, we want vendors to understand we are focusing more on methodology and/or qualifications and/or project plan versus price. The best way to do this is showing the high level criteria and % weight (in Canada, public sector is actually required to do this under the Agreement on Internal Trade)
2) for the individual questions/details being scored, we want suppliers to prove they understand what is ‘important’ – so if they truly understand the project and client, they will KNOW what questions/requirements are weighted more heavily!
But either way, some losing vendors will still want to argue the math. That’s why debriefings go more smoothly if approached as a ‘vendor development’ exercise – ie focus on their strengths, and give them ‘tips’ on areas for improvement
Yes, In my opinion, We should always inform.share the vendors about their selection criteria or rating crirterial in broad only but should not show the methodology used as there’s the high level criteria weightings. The method, weightage against criteria should not be shared but list of criteria with final rating should be shared with vendors to guide them for better performance in future. By this we may make relation very good & keep transparency. Vnedors will understand their weak points & will compete in future with more efficiency but gain/cost reduction with high level of procurement efficiency will be there.
I always provide evaluation criteria within the RFP but not in order of priority and I don’t provide the weightings. I want the supplier to consider all areas of the RFP not just on the pricing proposal element.
Within the scorer, as well as the section weightings, each question is also weighted in terms of importance.
I want to be constructive and give the supplier a chance to develop future bids, especially if it is a industry they are breaking in to, so will always be open during the debrief providing a snap shot of the evaluation method, tools used and scores against maximums drawing out both the strengths and weaknesses of the bid as provided by the evaluation team.
I set out the requirements prior to the de-brief so the unsuccessful candidates know I will not be drawn in to comparisons against competitors or the importance given to each question within the sections. In some cases I will provide the candidate with the presentation rather than a reliance on them taking notes.
If you want to achieve the best outcomes on any procurement project it is critical that the evaluation criteria is clearly stated. It is now a requirement to provide this information when advertising for public sector contracts across The EU Member States. Probity and transparency are key requirements in giving the public confidence (as well as suppliers) that the process is not corrupt. You may get unhappy suppliers challenging decisions but this will only occur where the selection criteria is vague and does not stand up to scrutiny. I have been undertaking evaluation of major procurement projects for years and the systems I employ are robust and effective. It is also important that you provide clear guidance to the evaluation team members that when they score a part of a submission that they are absolutely certain as to what that score represents. Asking them to score between 0 and 10 and not stating what each represents is a recipe for trouble. There are no excuses for not providing the information in advance.