Metrics of Procurement & Supply Chain Excellence

There is increasing pressure on Procurement & Supply Chain Management to demonstrate that they are operating at a very high standard. This presents a challenge for any organization, whatever their sector and whatever their range of purchases. It applies to the private and public sectors in equal measures. It is probable that regular Management Information is presented to the higher levels of management. Their difficulty is to understand how, effectively, real performance and achievements can be captured.

We have Metrics of Procurement & Supply Chain Excellence. There are 12 specific areas of professional performance that are evaluated. For example, Contractual Risk Management and Price Management are two facets. For each of these areas there are a number of descriptors, against which performance is evaluated. The descriptors enable the client organization to assess their performance on a range of performance from ‘Unaware’ to ‘World Class Performance.’ Our Metrics can be completed electronically or hard copy can be provided. Literally, thousands of procurement and supply chain staff have participated in this process. They can be used in any country and have been used in Europe, Canada, USA, Southern Africa and Hong Kong.

Whilst an individual can assess their performance, it is often the case that they are unsure where to place their performance. We offer our services, on a sampling basis, to discuss face-to-face with the participants, the quality of achievements. This independent view substantially enhances the credibility of the output report.

What are the benefits of using our Metrics? There are many benefits. First of all the process will identify the gaps in performance where improvements can be made. It has the use of identifying the future learning and development needs for the individual participants and for the function. It is a highly motivational tool from which procurement and supply chain ‘improvement projects’ can be identified. Above all it can assist in delivering world-class performance and ensure that the organization maintains a cutting edge performance.

Many examples can be given of the benefits. A Retail sector client used the Metrics to identify improvements that could be made in the merchandise selection and negotiation process, particularly with offshore suppliers. A Utility client with operations in Europe and the USA used the Metrics to identify current performance, then implemented a learning and development programme. One year later this client used our services to reapply the Metrics to evaluate operational and strategic improvements. An international Ship Repair organization used the Metrics to evaluate the complete procurement and supply chain process, from tendering for ship repairs through to completion of the repair. The Metrics identified gaps in obtaining quotations, negotiations, inventory management and in the management of contractual risk.

What is the payback? This will depend on the nature of current performance, but the Metrics have never been applied without a significant payback to our client. In one situation the total fees were circa £80,000 and the proven, audited financial benefits were circa £1.4 million. This was over a six month period and the savings continued to accrue. The international ship repair company later won the contract to refurbish QE II.

If an organization genuinely believes there are facets of their procurement and supply chain that are unique we can tailor the Metrics to meet their need. Finally, the Metrics are not static. They are continually updated as a result of our consultancy activities and research into international procurement and supply chain academic literature and practice reports.

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