CIPS South West Wales Branch Event uploads/… · Tracking the Journey to Best Practice ......

Consultancy Negotiation Skills Development Recruitment Interim Management Asia Sourcing © PMMS Consulting Group 2008 All Rights Reserved www.pmms-group.com

+44(0)1253 795177

CIPS South West Wales Branch

Benchmarking – Learning from Experience

Presented by:

Dave Porter

© PMMS Consulting Group 2005/JR2755 Consultancy Negotiation Skills Development Recruitment Strategic Proposals 2

How do you measure ‘performance’?

The 3 ways of assessing purchasing performance:

1: INPUTSManpower, transaction levels, costs

2: OUTPUTSPrices, quality, service levels

3: PROCESS & PRACTICEComparing how purchasing is undertaken versus best practice


How do you measure ‘performance’?1: INPUTS

Relatively easy to do but …..

i Tactical information

i Focuses upon operating cost…a very small proportion of total purchasing spend

i Limited - emphasis on cost and efficiency not contribution

i Often sponsored by those with little interest or insight into the strategic role of Procurement

Purchasing seen as essentially a tactical /administrative activity with little or no real business contribution

iHeadcount per £ million of spendiContracts handled per buyer per yeariCost of Function as % of spendiTime taken to satisfy a requisition



2: OUTPUTS

Better than ‘Inputs’ but ……….

i‘Rear view mirror’

iVery limited in response to real business needs

iDilutes effort through unproductive time in justifying ‘our’ performance

iDoes not help identify opportunities

Does not address: ‘How good are we?’ and ‘How can we improve?’

i Savings/Cost Avoidancei Qualityi Supplier service levelsi Supply base reduction/rationalisation


• Emphasis is on ‘how we do things’:

• Must consider the total supply process

‘If best Procurement practice is being adopted then the best possible results will be achieved’

‘If best Procurement practice is being adopted then the best possible results will be achieved’

• Relies on an understanding of Best Practice and an ability to translate this to the context of a specific organisation

• Underlying assumption is……….

• Therefore identifies explicit opportunities and planning steps –provides a forward route map – a ‘strategic planning platform’

3: PROCESS & PRACTICE



Organisation& Internal

Relationships

PurchasingProcess & Controls

People

Contribution&

Influence

Enabling FoundationEnabling Foundation

Quality ofAnalysis

Delivery ofSustainable

Results

DifferentiatedStrategy &

Actions

Strategic Purchasing –

Quality of Process,Results &

Sustainabilityof Delivery

Permanence of Change

Delivery & SustainabilityDelivery & Sustainability

Knowledge & Systems

Technology

External RelationshipManagement

PMMS Purchasing Excellence Model

The essential building blocks which are a prerequisite for effective, strategic procurement


Gap Analysis and Action Plan

Best Practice 10

1: Contribution &Influence 4.3

GAP

Gap Analysis

Lack of effective process to manage low value transactions

Rudimentary Supplier Database and lack of up to date & comprehensive supplier informationProcurement is often involved too late in

the Procurement process and is not involved in strategically significant projects

Gap Analysis

Lack of effective process to manage low value transactions

Rudimentary Supplier Database and lack of up to date & comprehensive supplier informationProcurement is often involved too late in

the Procurement process and is not involved in strategically significant projects

0

Action Plan

ResponsibilitiesMilestonesResource requirementsCosts and benefitsRisk managementTargets

Action Plan

ResponsibilitiesMilestonesResource requirementsCosts and benefitsRisk managementTargets

Target Score


Environment Agency Benchmark Scores

0

10

20

30

40

50

60

70

80

0 4 8 12

Ben

chm

ark

Scor

e

1997 2001 2005 2009

36.9

50.9

62.6

Target2009

Total Benchmark Score

Enabling Foundation Score22.5

30.1

37.6

Benchmark Scores

Tracking the Journey to Best Practice


Tactical Procurement

StrategicProcurement

The Impact of Strategic Procurement

0

10

20

30

40

50

60

70

80

90

100

0 1 2 3 4 5Time (Years)

Con

trib

utio

n


Organisation& Internal

Relationships

PurchasingProcess & Controls

People

Contribution&

Influence

Enabling FoundationEnabling Foundation

Quality ofAnalysis

Delivery ofSustainable

Results

DifferentiatedStrategy &

Actions

Strategic Purchasing –

Quality of Process,Results &

Sustainabilityof Delivery

Permanence of Change

Delivery & SustainabilityDelivery & Sustainability

Knowledge & Systems

Technology

External RelationshipManagement

PMMS Purchasing Excellence Model

© PMMS Consulting Group 2005/JR2755 Consultancy Negotiation Skills Development Recruitment Strategic Proposals

Sourcing Knowledge Questionnaire - Online

• The Sourcing Knowledge Questionnaire (SKQ) is a first step tool for assessing the technical procurement knowledge of individuals, teams and companies

• It has now been undertaken by over 5000 global procurement professionals across diverse sectors and levels providing in depth benchmarking data

• It was originally developed for Coca Cola, P&O Nedlloyd and Reuters

• Original objectives– Focus development investment– Organise business and personal development priorities– Avoid a “sheep dip” approach– Benchmark for comparative and improvement baseline– Sufficiently complex to measure at multiple levels

• Subsequently used to– Evaluate impact of training interventions– As a recruitment filter– As a core element of personal development planning– As a springboard to evaluate application capability


Sourcing Knowledge Questionnaire Total Population Summary Data

Total population 5049

supply base

analysis

risk analysis

negotiation skills

customer client

management

contractmanagement

contract selection & legal

procurement process

management

finance for procurement

supply chain

analysis

total

Benchmark/ Average 2.95 2.96 3.10 3.31 3.39 3.16 3.52 2.70 3.44 28.55

BIC (90% percentile) 3.76 3.76 4.18 4.31 4.50 4.21 4.43 3.82 4.47 37.44

Max 4.80 5.00 5.00 5.00 5.00 5.00 4.86 4.57 5.00Min 1.60 1.24 0.27 1.15 0.75 1.00 0.57 0.09 1.00

> 4 30 100 723 1025 1192 760 1362 145 1376< 3.25 3154 3109 2808 2239 1957 2793 1730 3654 1934


Online Skills Assessment

13

Benchmark – the average of the PMMS benchmark of 5000 global procurement professionalsBest In Class – the average for the top 10% of the benchmark

>4 - shows a group area of strength< 3.25 - shows a group development need< 2.25 - shows a group significant development need


Scores below 3.25 & 2.25

Consultancy Negotiation Skills Development Recruitment Interim Management Asia Sourcing © PMMS Consulting Group 2008 All Rights Reserved www.pmms-group.com

+44(0)1253 795177

CIPS South West Wales Branch

Benchmarking – Learning from Experience

Presented by:

Dave Porter

CIPS South West Wales Branch Event uploads/… · Tracking the Journey to Best Practice ......

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