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Developing Supplier Profiling for Efficient Delivery in the Public Procurement

Article in Solid State Technology · November 2020

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 Solid State Technology
Volume: 63 Issue: 6
Publication Year: 2020

Developing Supplier Profiling for Efficient

Delivery in the Public Procurement

M. Halizahari1, Norlaila Mazura Mohaiyadin2, Husain, H.A.3

1,2
National Defence University of Malaysia, Faculty of Defence Studies and Management,
Kuala Lumpur, Malaysia
3
National Defence University of Malaysia, Language Centre, Kuala Lumpur, Malaysia

E-mail: haliza.mz@upnm.edu.my1, norlaila@upnm.edu.my2, hilmiazani@upnm.edu.my3

Abstract— Many issues have been discussed on managing public procurement effectively
and efficiently. The most challenging aspect in managing public procurement is related to the
delivery of items and services. This is particularly associated to the supplier performance.
Many studies have identified the public procurement management difficulties such as the
delivery of ordered item on time, fulfil the specific requirement by the procurement office
and compliance of contract clause by the supplier. Failing to comply to these, it will
definitely affect the supplier performance hence it will also reflect to the efficiency of the
procurement office. Therefore, this paper has identified the issues related to the supplier
performance in public procurement. 17 procurement officers have been interviewed and
resulted to three main themes; Best value for money, On time delivery and Fulfilling orders
according to the requirement. In addition to these three themes, a systematic review approach
has been used to review the articles published in electronic database to analyse the right
criteria of supplier which are required for an efficient public procurement. As a result, a
supplier profiling was developed. This study has assisted the procurement department to
identify the right supplier criteria in selecting the best supplier before awarding any jobs to
the supplier. The supplier profiling can be used not only in the public procurement
department but also in the private sector.

Keywords— Supplier Profiling, Supplier Performance, Public Procurement, Supplier

Criteria, Tendering Process

I. INTRODUCTION
Issues related to poor delivery in public procurement had been recurring like never ending
stories. Previous studies had shown that poor delivery was caused by failure in identifying the
right supplier [1]. There are also studies stipulated that the poor delivery was caused from the
procurement that was awarded to the lowest price offered by the supplier [2]. Selection of
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supplier is not only based on the lowest price, but there are also selections based on technical
merit, price offered based on maximum budget and best proposal subjected to pricing and

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Volume: 63 Issue: 6
Publication Year: 2020

technical evaluation [3]. Even though the decisions in selection of supplier were vary, the
challenge is to ensure the supplier that has been awarded could deliver according to the
requirement. Therefore, it is important to understand the criteria of supplier which can
successfully perform and deliver the product or services not only according to the
requirement but also based on the promised or contract that had been awarded.

II. SUPPLIER SELECTION PROCESS IN PUBLIC PROCUREMENT

In business, company is consistently looking for ways in maximising profit and reducing
cost [4]. To achieve this objective, the most important decision is in selecting suitable
supplier in order to have quality products, services and also to prevent from delay on delivery
[5]. By having suppliers that are committed, it is the right track for the company to satisfy the
customer in delivering the right product with the right price and time of delivery.

However, the objective in public procurement is totally different from business perspective,
which maximising profit is none of the agenda. Public procurement is implemented to
fulfilling the people’s need for well-being. For public procurement in Malaysia, they adopt
the lowest bid to award the contract. Lowest price bid in tender may win the contract [5]. The
lowest bid is sometimes within the government budget or may also within the government
estimation. The process of supplier selection has to go through evaluation by the technical
and pricing committee.
A. Identifying Needs
Procurement process begins when the government agency has identified there is a need for
procurement of item or services and ends with awarding to the lowest bid supplier after being
evaluated by the committee. To ensure the government agencies obtain the item or services
required, understanding the needs, user requirement and technical specification is crucial [6].
The needs and requirements should be precisely defined [5]. When the user is certain, the
government agency will submit the tendering proposal along with the budget estimation to
the Procurement Department for tendering process.
B. Tendering Process
The tendering proposal received from the user was then translated into the tendering
document and advertised in the major newspaper and in e-Perolehan website. The supplier
with the right criterion is eligible to participate in the tender. Interested supplier has to fill-up
the tender document and submit their bid within 14 days of the tender advertisement.
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a. Understanding
the needs, user
Identifying Needs
requirements and
technical specification.

b. Precisely defined
the needs and
requirement.

c. Submission of
tendering
Tendering proposal and written
documents on
requirement,
technical specification
and
scope of contract.

d. Advertised in major
local
newspapers and e-
Perolehan website.

e. Established
technical and pricing
Evaluation
committee.

f. Evaluation based
on tendering proposal
and price quoted by
tenderer.

g. Awarding to the
supplier who meets the
Awarding
criteria.

h. Negotiation
process.

i. Signing the
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contract
Fig. 1. Tendering Process

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Volume: 63 Issue: 6
Publication Year: 2020

C. Evaluation and Supplier Selection

Evaluation committee is established to review and evaluate the tender document. The
evaluation begins by evaluating the basic qualification such as supplier’s registration
certification, proof of financial credibility, credit history and record of experience. Following
the preliminary qualification, disqualified suppliers are eliminated. Then, the committee will
evaluate and rank the bidder based on the evaluation criteria and weightings on technical
specification. Finally, the evaluation on price bid by the supplier. At this stage, the lowest bid
and the supplier who matches technical specification will win the tender.
D. Awarding
The supplier who wins the tender will be called for negotiation and signing the contract.

In all the tendering process discussed, the crucial stage was during the evaluation and
selection process. In this stage, the committee was only evaluating the supplier based on the
criterion. Therefore, the issues related to poor delivery happened may cause by the lacking in
supplier selection which due to insufficient information on criteria of supplier. Hence, there
are many issues related to the supplier performance in performing their obligation during the
tenure of contract.
III. METHODOLOGY
Qualitative research methodology used in this research was to identify the issues related to
poor delivery and the best criteria that are required for a supplier for efficient performance.
This research has been conducted to understand the phenomenon of supplier performance in
delivering the requirement. Interviews have been conducted with procurement officers as an
interpretation of guideline and follow by purposive search on scholarly databases to find
relevant literature addressing supplier criteria. Finally, systematic review using thematic
analysis and synthesis of the results were taken from the literature. The text emerged was
relevant with specified supplier criteria.

A. Identifying Issues Related to Poor Delivery

Interviews were conducted over 16 personnel who are also procurement officers involved
directly with the public procurement. These interviews were meant to gauge the perception of
the procurement officers on poor delivery. These research participants have identified that the
poor delivery in Public Procurement is usually related to price offered, duration of time
delivery and the quality of product or services ordered. Therefore, based on the expert
opinion, the data were then transcribed and analysed, group into three main themes namely,
best value for money, on time delivery and fulfilling the order according to the requirement.

B. Identifying Efficient Supplier Criteria

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After looking into the issues discussed, poor delivery was caused by failure of the supplier to
fulfill the government agencies requirement. Looking at this scenario, it shows that the
supplier is irresponsible. Therefore, this research continued with identifying the best criteria

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Volume: 63 Issue: 6
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that represent a good supplier. Systematic review adopted in this study was used in order to
consistently identify the Right Supplier into developing supplier criteria profiling. It is
believed by having a supplier profile, it represents the best supplier criteria that will assist in
selecting the best supplier which will prevent from poor delivery issues continue.
IV. FINDINGS

Most of the cases show that procurement process was compromised [7] and supplier was
complacent [8]. Therefore, to prevent and lessen the issues of poor delivery, it is crucial to
identify the best criteria of the supplier in delivering their services in order to develop the
supplier profiling. Criteria considered for supplier selection is based on delivery time, service
performance and price [9].
A. Best Value for Money
Best value procurement focuses on gaining the best value of the item or services at the lowest
price [10]. However, [5][11] argued that lowest bid price may cause late delivery. In some
cases supplier who offers lower price may have the tendency of risk in delivering their
promises [12]. These issues have also been observed which usually occurred when the
government awarded the tender to the supplier with lower price will usually lose at least half
of the cost [13]. [14] has tested the direct impact between price and performance which has
resulted 50% of the sample had breach of contract and it is proved that there was trade-off
between price and performance. This situation happened when the supplier under quote
during tender. The supplier is likely to deliver what has been promised. The probability
somehow likely low prices will be associated with low performance [13].

Despite, awarding tender with lowest price, supplier should offer reasonable price, where
government will get price savings with quality product and services. Supplier is accountable
on what being promised [15] especially on the quality offered based on price quoted during
tendering [15][16]. Besides, supplier should also offer new and innovative product, which
will gain benefit to the government [17]. This type of supplier has the capability in delivering
the user demand with competitive price [5][15].
B. On Time Delivery
Many issues have been brought-up related to supplier performance were caused by
unreliability of the supplier to perform their task. With the changing of market needs, supplier
must improve their supply reliability in order to sustain [18]. Response time is important for
the supplier to maintain reliable and sustain in the industry [131][15]. Delay in delivery
which happened between actual date and the promised date of delivery could not be accepted
[13]. This will give impact on other activities. With a quick response towards the market
demand, it will improve the supplier delivery and make the delivery on time which created
win-win situation.. This will also help in minimising risk [19].
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Volume: 63 Issue: 6
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C. Fulfiling Orders According to the Requirements

Supplier with best past performance is considered as an expert [10]. Poor performance
supplier will always delay, cost overrun and could not deliver according to the requirement
[20]. Supplier’s performance is based on quality in their past achievement in fulfilling orders
which include technical ability, financial soundness, capability and competency [19][21].
[13] added suppliers who are rigid can perform better and could abide to the requirement.
With good performance, it will generally increase customer satisfaction [1][22].
Therefore, based on the review above, multiple perspectives on supplier criteria were
generated as in Table 1 which is relevant and required in order to have the right supplier to
fulfill the customer demand and can be delivered effectively.

TABLE I. EFFICIENT SUPPLIER CRITERIA

Supplier Criteria Explanation

Quick response Supplier response promptly to the customer’s volatile and

dynamic demand trend in order to deliver timely.

Technical ability Supplier is competence and capable to deliver according to the

customer’s requirement evaluated by the customer based on
supplier past performance.

Financial soundness Supplier long term viability in doing business that involved
evaluation of threshold cashflow which qualified the supplier
with less credit risk that leads the chance in achieving
successful customer demand.

Lowest bid Lowest price at the most favourable to the customer when the
supplier quoted the price which sufficient enough to include
anticipated direct or indirect cost and it is low enough to be
considered most attractive offered by competitors.

Good performance Customer who perceived the supplier positive performance

which developed confident in continuing business and
increases trust and loyalty to the supplier.

Less risk Dependable and reliable supplier who provide hassle free
which offer best price, quality product and on time delivery.
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Competence Ability to competitively offers more variant product or services

in respond to the customer demand.

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Volume: 63 Issue: 6
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V. CONCLUSION
The public procurement process is done systematically through tendering process. It has been
identified that the poor delivery in Public Procurement is usually related to price offered,
duration of time delivery and the quality of product or services ordered. This poor delivery
was caused by failure of the supplier to fulfill the government agencies requirement.
Therefore, there are several supplier criteria that must have in a supplier in order to prevent
from repeating these issues. It is crucial to correctly choose good performance and efficient
supplier. By having these criteria, it is believed that the government agencies will have
supplier that offers best value for money, delivery on time and fulfilling orders according to
the requirement. The contribution of this study is to provide the supplier criteria for efficient
delivery in public procurement. Therefore, the contribution of this paper might help the
procurement office in the selection of supplier.

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