Articles \"Evaluating Supplier Performance\" and \"Vendor Management

¶ … articles "Evaluating Supplier Performance" and "Vendor Management Tips: Building Relationships" and evaluates the criteria they discuss.

There are inherent problems in using performance evaluations, as McGuiness et al. point out. "To have any validity, performance evaluations must be systematic and fair, and based upon explicit criteria of which the suppler has notice" (McGuinness, Kevin, Bauld & Stephen, 2005). For such evaluations to be of any value, they must use valid performance measures and reporting mechanisms. Of course, such a labor-intensive process precludes its being practical to implement for most projects.

Tyler's article focuses instead on ways to effectively manage the vendor relationship. In terms of ranking, some of the tips are more effective and more likely to yield the desired outcome of successful project completion, and are therefore more valuable than others. The following criteria are the most important:

All the criteria that recognize the value of a successful implementation as win-win for both sides. As Goldfarb puts it, "If both partners cannot get value from the investment (no matter the scale), then it is the wrong investment or partner" (Tyler, 2005). The tips which explicitly recognize and promote this mutually beneficial outcome include "finding a way to build a relationship," "asking for ongoing responsibility," and "treating your partners as such, not as vendors."

All the criteria that focus on quantifying the benefits of the proposed systems or solutions are also important: "starting by defining what the best deal means," "tying guarantees to money," and "focusing on value not price."

"Demanding proof of concept" and "always getting competitive bids," are standard due diligence and therefore important.

As for criteria not listed in the articles, it should be mentioned that selecting a vendor strictly on the basis of price is not a winning project management strategy. Pricing should be competitive, but selecting the low bidder, as opposed to the best value offeror, sets the stage for ongoing performance and quality control issues.

Other criteria that could be included: The vendor's ability to help manage stakeholder expectations on the buyer side is important (Kumar, 2009). Because the vendor and project manager will both be judged on the basis of how well stakeholder expectations are met, it is in their mutual best interests to manage and meet expectations.

Another useful criterion is being able to work with the vendor organization to develop out of the box thinking to address challenges or constraints (Kumar, 2009). A vendor who can be counted on to provide creative problem-solving brings valuable skills to a potential partnership during pre- and post-implementation phases of a project.