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Breakout Session # 1403 Tim Long Acquisition Solutions, Inc. Date April 14, 2008 Time 3:00pm–4:00pm

Performance Metrics for Strategic Sourcing . Breakout Session # 1403 Tim Long Acquisition Solutions, Inc. Date April 14, 2008 Time 3:00pm–4:00pm. Agenda. Introductions 3:00-3:05 Overview of Metrics 3:05-3:15 Sharing Experiences 3:15-3:35 Questions and Answers 3:35-4:00.

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Breakout Session # 1403 Tim Long Acquisition Solutions, Inc. Date April 14, 2008 Time 3:00pm–4:00pm

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  1. Performance Metrics for Strategic Sourcing Breakout Session # 1403 Tim Long Acquisition Solutions, Inc. Date April 14, 2008 Time 3:00pm–4:00pm

  2. Agenda • Introductions 3:00-3:05 • Overview of Metrics 3:05-3:15 • Sharing Experiences 3:15-3:35 • Questions and Answers 3:35-4:00

  3. Sharing experiences • David Gragan, Chief of Procurement, District of Columbia • John Bashista, Deputy Director, Office of Procurement and Assistance Management, U.S. Department of Energy

  4. Metrics Matter “What gets measured, gets done.” • Effectiveness • Measure how well sourcing program delivers outcomes that advance organizational objectives and builds capacity to continue doing so in the future • Focus on “why/whether you buy” • Efficiency • Measure how well sourcing processes operate • Focus on “how you buy”

  5. Measuring Effectiveness

  6. Measuring Capacity • Governance • Do we have effective mechanism to set priorities and reconcile competing interests to guide sound sourcing decisions? • Demand Management & Forbearance • What did we decide not buy? • Data Availability • Do we have a data predicate for making decisions at the enterprise level? • Workforce • Do we have the experience and training in the workforce to sustain success? • Strategic Linkage • Does what we buy contribute to organizational goals & objectives?

  7. Measuring Efficiency * The Hackett Group

  8. Private Sector Strategic Sourcing With World-Class Performance Metrics

  9. Balance Key to Metrics Success • Efficiency without effectiveness = Futility • Focus metrics first on effectiveness with intensity on link between sourcing outcomes and enterprise objectives • Effectiveness without efficiency = Unsustainable results • Sourcing processes that work well enable continued effectiveness within constraints Disproportionate focus on any component metric will produce anomalous results and hinder success

  10. Align Metrics for Maximum Momentum • Measure what really counts • Select metrics aimed at producing group and individual behavior directly linked to achieving organizational objectives • Keep it simple and few focused on both measures within exclusive group control and contribution to organizational synergy • Apply metrics consistently across the organization • Accountability against common measures promotes alignment of thought and activity around achieving enterprise goals • Must include leadership, middle management, internal controls and oversight

  11. Include Group and Organizational Metrics Customer External outcomes Financial Accountability Policies and Processes Internal outcomes Human Capital Knowledge and Information Management Leadership and Organizational Alignment More granular to reflect elements of GAO Framework

  12. Transparency Promotes Alignment • Communicate desired outcomes and metrics clearly • Cascade metrics from the top down to all levels of organization and across all groups to promote sense of shared undertaking • Establish targets in anticipation of periodic review and validation • Capture and report data on metrics • Select metrics for which data is available to assess progress • Incorporate metrics review in operations and planning meetings

  13. Retain Flexibility to Modify Metrics • Focus on outcomes provides continuing validation • Metrics must change when organization hits measures, but does not achieve desired outcome • Metrics/target must adjust as environment changes and strategy evolves • Regular metrics reviews drive continuous improvement • Capacity measures must escalate as sourcing program matures • Use metrics review to celebrate success an identify opportunities for improvement

  14. Private Sector Business Focus Revenue Driven Goal – Make $$ Results Orientation Financial Measures Centralized Governance Advance for Performance Competitive Imperative Public Sector Mission Focus Budget Driven Goal – Spend $$ Process Orientation Policy Measures Decentralized Governance Advance for People Recent Policy Mandate Sector Differences Matter Understanding Context Critical to Deciding on Strategy and Areas of Emphasis

  15. Sector Differences Matter * The Hackett Group

  16. Questions and Answers

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