Enhance Your Organisation’s Contractor Management Capability with Acceptance Sampling

In a recent article, I explained how world-best-practice acceptance sampling methods can help organisation’s enhance their contractor management capability.; refer to website library http://www.compliance-master.com/support/reference-library.html

Contractor Performance Monitoring and Assessment

The need for improvements in contractor performance monitoring and assessment processes was recently highlighted in a survey undertaken by the International Association of Contract and Commercial Managers (IACC), which concludes;

“Contract management is often a series of disconnected activities; rather than a process; which often leads to poor visibility and metrics for control.  These common inefficiencies relate closely to access to good information and to work-flow.  Senior Managers state improvement would contribute to better risk management (69%) and reduced costs (89%) and higher revenues.” [1]

Although best quality management practice requires organisations to be always on the look out for non-compliant goods and services (i.e. ISO 9001), it is my experience that many organisation’s lack the expertise and systems needed to monitor all but the simplest to measure contractor performance metrics; (i.e. cost and timeliness).

This narrow focus on quality control often results in important compliance requirements being omitted from a contract or linked to controls  that don’t come into effect until something serious goes wrong (i.e. asset failure, employee or public injury, property damage, regulatory breach, etc.); by which time it is often too late to identify and correct the causes of non-compliance before they adversely impact on contract outcomes.

Benefits of Acceptance Sampling by Attributes

The Acceptance Sampling by Attribute methodology is an effective and efficient alternative to 100% inspection for monitoring, assessing and controlling contractor performance.  Its benefits include;

  • Best Practice – the methodology is recognised and published by standards bodies worldwide; ISO 2859:1, AS 1199:1, ANSI/ASQ Z1.4, BS 6001:1, etc.
  • Optimised Auditing– advanced statistical methods are used to calculate the “optimum” sample size needed for each audit,
  • Easy to Understand – the methodology is faster and requires less skill to operate than other statistical sampling methods,
  • Risk Focused – the auditing process is further optimised by categorising and sampling compliance requirements according to their non-compliance risk,
  • Consistency – standard compliance controls can be consistently applied to a range of possible non-compliance outcomes,
  • Compatible – the methodology is fully compatible with leading quality management and control systems; ISO9001, SPC and Six Sigma.

Inspection Severity Switching

Another useful feature of the Acceptance Sampling by Attributes methodology  is its inspection switching capability; which is used to switch a process (i.e. contractor) between three levels of inspection severity (i.e. Normal, Reduced and Tightened) in response to changes to its compliance performance.

The reason why this is such a usesful feature is that organisations can use a contractor’s inspection level as an objective indicator of its compliance capability when deciding to make important quality control and improvement decisions; much like “Traffic Light” indicators are used to assess the performance other business processes.

Using the Contractor’s Inspection Severity Level 
as a “Traffic Light” Performance Indicator

The Compliance Master® Solution

By applying the Acceptance Sampling by Attributes methodology to the auditing, assessment and control of contractor compliance levels, organisations can substantially enhance their contractor management capability and substantially reduce their non-compliance risks.

Compliance Master® is the only web-based software solution of its type that uses the Acceptance Sampling by Attributes methods and switching rules outlined in the standard to optimise the compliance auditing, assessment and control processes.

Visit our website to read more about how Acceptance Sampling by Attributes and Compliance Master can enhance your organisation’s contractor management capability, and much more, (http://www.compliance-master.com/support/reference-library.html); or give us a call at +61 1300 827 9333.

[1] The International Association of Contract and Commercial Managers (IACCM). April 2003.  Study: “Contract Management: An Opportunity* Still Being Missed?”


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