What are the benefits of market dialogue with suppliers? (2.1.1)
- Suppliers have technical expertise and access to best practice.
- They understand the market and and how the product can be delivered from a technical and commercial perspective.
What are the risks of market dialogue with suppliers?
- Risk of “conflict of interest” between a supplier and buyer.
- Supplier will not want to support competitors or give away competitive advantage.
- Suppliers can influence the specification in an anti-competitive manner.
What is the market dialogue process? (2.1.1)
Primarily applies to public sector.
1. Prepare an outline specification. This is summary of needs and wants.
2. Identify suppliers to consult. Might be whole market, might be a few.
3. Design method of market dialogue e.g. 1:1 meeting or conferences.
4. Conduct dialogue.
What are the basics of drafting specifications from the buyer’s perspective? (2.1.2)
- Spec must state buyers requirements clearly.
- If spec doesn’t state a requirement, supplier cannot be expected to deliver it.
- Spec is used for supplier to price up offer.
- Spec is used to measure performance.
- Caveat emptor - buyer cannot rely on ambiguous text.
- Spec should include performance measures e.g. KPIs and service levels.
What are the typical sections of a specification document? (2.1.2)
- Scope
- Definitions
- Description of requirement
- Testing and acceptance
- Change control mechanisms and remedies
- Environmental, Social and Governance criteria.
What are the benefits of standardisation of requirements? 2.1.2
- Creates uniformity, reducing product variety and increasing efficiency.
- Administration of purchasing, transport, storage costs etc are reduced.
What are the disadvantages of standardisation of requirements? 2.1.2
- Little variety
- no customisation
- Less flexibility for buyer
- Bureaucratic to follow
- Barriers to entry for SME
What are common international standards? 2.1.2
- ISO9001 - Quality management systems
- ISO14001 - Environmental management systems
What are information assurance requirements in specifications?
It relates to the security of data within IT systems and how it’s processed, used and stored.
What is the process for defining KPIs? 2.2.1
- Work with stakeholders to define ‘critical success factors’.
- Consider performance areas, e.g. cost, quality, delivery
- Define measures. Should be tangible, no more than 6 KPIs.
- Make each measure SMART. Specific, measurable, achievable, relevant, time-bound.
- Accepted by stakeholders.
- Embed in contract documentation.
What are service levels? 2.2.2
Service levels are a set of service standards that break down the overall service into a granular form. They provide the same function as KPIs but they solely focus on service and usually pitched at micro level.
How are services different to tangible products?
- Services are intangible.
- Services are heterogenous.
- Services perish immediately.
- Services cannot be stored or transported.
- Services cannot be separated away from deliverer.
What is a service level agreement? 2.2.2
It is a formal document of all required service standards for the delivery of a service, which is signed by both parties. SLAs are stand alone documents.
What are typical KPI measures for quality performance? 2.2.3
- Defects - number of unacceptable quality products (parts per million)
- Tolerance - min/max range of acceptable measurements
- Returns - %age of products returned based on poor quality
What are typical KPI measurements for timeliness? 2.2.3
- Response - how quickly a customer gets a response from service provider.
- Lead time - time taken from initial demand for customer to receive required deliverable.
- Cycle time - duration from production through to delivery/consumption.
What are typical KPI measures for cost management? 2.2.3
- Budgets - %age variance between a budget sum and actual costs.
- Cost reduction - amount costs need to be reduced by certain time
- Target cost - initial cost objective
What are typical KPI measures for resource efficiency? 2.2.3
- Resource budget - quantity of resource for a given project/business activity
- Headcount reduction
- Supplier rationalisation - targeted number by which number of suppliers needs to be reduced by
What are typical KPI measures for delivery? 2.2.3
- OTIF - % of deliveries on time in full
- Rejects - no. of delivery rejections
- Schedule - timetable of deliveries with slots and deadlines
