September 16, 2013
What does quality of supply really mean?
Procurement Perspectives | Stephen Bauld
The term "quality contractor" is used quite often when government procurement buyers are evaluating bids, but what exactly does this term mean?
Everyone has a general idea of what the word quality means, but tying down its specific meaning in the purchasing context can be problematic.
In a typical purchase of goods, a wide range of different considerations would seem to be relevant.
Suitability to purchaser’s requirements (intended use, etc.);
Maintenance and service requirements.
In order to insure suitability for intended use, it is customary for municipalities to specify their technical requirements when placing an order. skyrockets.
While detailed specifications are not always possible, some clear guidance should be given to suppliers as to the general capabilities that the item to be purchased will be expected to satisfy.
This information will often be conveyed by way of engineering specifications, detailed descriptions of performance requirements, blueprints and references to industry certification standards.
The suitability of goods not only relates to their intended purpose, but also to the environment in which they are to be used.
For instance, equipment must not be larger than physical dimensions of the building in which it is to be contained. It must not be heavier than the load-bearing capacity of the flooring in that building. If the building is unheated or not air-conditioned it must not be unduly sensitive to heat or cold, etc.
If equipment requires running water or electricity to operate properly, its demands in this respect should be considered with existing supply, or there should be some process (and budget) for modifying the supply at the place of intended use.
While these matters may seem obvious, it is surprising how often they are not considered in practice until after the purchase is made.
It follows that the assessment of quality is an inherently subjective process that must take into account the unique specific purpose to which the municipality will put the goods and services that it procures.
Since higher quality products are normally more expensive then lower quality products, in a very large percentage of cases the critical issue is whether the additional expenditure will deliver sufficiently more bang for the buck to justify the higher price.
The calculation can be hard to make, even when perfect information is available.
Consider, for instance, the simple purchase of two bolt cutters, one which has a life expectancy of 1,500 uses and a cost of $50 dollars, in comparison to a second which has a life expectancy of 5,000 uses against a cost of $100 dollars.
Since the second unit cost only twice as much, but lasts more than three times as long, it might easily be described as a superior purchase.
However, it is also necessary to consider the level of usage in which the bolt cutters will be put.
If the municipality expects to use that tool only 100 times per year, then the $50 dollar cutters may be a bargain.
On the other hand, if the level of usage was 800 times a year, then the $100 dollar cutters seem a far more reasonable buy.
To decide which cutter to purchase, the buyer must take into account such additional concerns as risk of loss (i.e., suppose for instance that the shrinkage rate among hand tools owned by the municipality is one in three per year) and the risk of damage to the cutters from other than normal wear and tear.
The main point of this example is that for customers, the quality of a supplier performance is measured using very different criteria. However, it is customary for significant customers to insist that a given supplier has a proper quality control in place.
Stephen Bauld is Canada's leading expert on government procurement. He can be reached at firstname.lastname@example.org.
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