Research, Development, Analysis & Performance Improvement Proposals by:

1. Q5 PROCUREMENT SOLUTIONS A Value Management Process Patent Pending:RSA Patent Application - No. 2004/6749 Research, Development, Analysis & Performance Improvement Proposals by: TheCentre for Applied Management Science Trust www.camstrust.org

2. SCARY SCENARIO YOUR REPUTATION AND THAT OF YOUR COMPANY DEPEND ON : • Staff members across the internal value chain • Independent suppliers of goods and services • ALL WITH DIVERSE PROFICIENCY, YET: • Little independent feedback on their performance • Little or no direct control over their performance • No idea of how they impact your reputation

3. Agenda • The ten goals to defray a scary scenario • What will the end result be? • What should we do, in general immediately? • What should we do with work in progress? • What are the first steps for new work? • How do we enforce continuous improvement? • Benefits – from a scary scenario to a win-win scenario • What is the way forward today?

4. TEN GOALS FOR A PROCURER SAVE YOUR SCARCE RESOURCES (Money, Time & Emotional Energy) ABLE TO MAKE INSTANTANEOUS BEST-FOR-ME DECISIONS PROTECT YOUR REPUTATION – Quantified impact on your ability to deliver ABLE TO JUSTIFY PROCUREMENT CHOICES ERADICATE CORRUPTION AND BRIBERY BECOME MORE COST EFFECTIVE (Cost to performance comparisons) REDUCE YOUR EXPOSURE TO RISK, CLAIMS & PENALTIES PROACTIVE REMEDIES - Monitor value being created while in process BECOME A MORE RELIABLE SUPPLIER OF GOODS AND SERVICES SCORE 3-BEE POINTS ON BBBEE SCORECARD IT STARTS WITH PROCUREMENT as simple as that, and as complicated as that ALL OF THE ABOVE COMPLEXITIES ARE INTERDEPENDENT AND ARE BEING AFFECTED BY PROCUREMENT

5. Agenda • The ten goals to defray a scary scenario • What will the end result be? • What should we do, in general immediately? • What should we do with work in progress? • What are the first steps for new work? • How do we enforce continuous improvement? • Benefits – from a scary scenario to a win-win scenario • What is the way forward today?

6. INSTANTANEOUS BEST-FOR-ME DECISIONS • COMPLIANCE / PROFICIENCY INDEX: (CPx) • Meeting your trade-, business-, special- & ISO requirements • PERFORMANCE INDEX (Px) • Track record – met or exceeded expectations of own clients over the past six months • Qualify for invitation to tender / quote • Those not qualifying are on the road of development in order to qualify. • VALUE INDEX (Vx) • Comparing Performance to cost (tender / quote) • High performance score means on time, within budget and as specified • Strong motivator for development – higher Px means higher Vx • More value for money PROCUREMENT DECISION COULD NOW BE JUSTIFIED PROCUREMENT DECISION COULD NOW BE JUSTIFIED

7. Agenda • The ten goals to defray a scary scenario • What will the end result be? • What should we do, in general, immediately? • What should we do with work in progress? • What are the first steps for new work? • How do we enforce continuous improvement? • Benefits – from a scary scenario to a win-win scenario • What is the way forward today?

8. NAME OF ENTERPRISE ……………..….. ……………. B2B Compliance Indices CONTACT DETAILS ……………………….. ……………………….. …………………………………………….………………………….. COMPLIANCE INDEX 62.4%  SPECIALITY …………………… CAPACITY …………………… REMARKS: Compliance Benchmarks for the Industry by the Industry

9. Overall Client Value Perception 82% Repeat Business 68% Overall Client Satisfaction (Site Performance Index) 94% Management: Executive & Line 81% & 63% Support Staff 88% Supervisor 72% Authorising function 71% Procurement Function 94% User Function 23% Trade Related 94% Business Related 23% Threats & weaknesses 12% Security & Safety 75% BUSINESS INTEGRITY INDICES - “the WHY?” MAKING TRANSPARENT: PERFORMANCE / CONSISTENCY / REAL COST OF SUPPLIER NAME OF SUPPLIER ……………………. (Remaining Compliant) CLIENT LOYALTY INDEX 81.3% EMPLOYEE PROFICIENCY INDEX 76.1% SUSTAINABILITY INDEX 59% SUPPLIER PERFORMANCE INDEX 62.7% SUPPLIER: Performance Index: 67% Value Index: 43% BEST PRACTICES INDEX 58.5% RISK MANAGEMENT INDEX 43.5%

10. ENSURING CONSISTENCY • Ensure compliance and Establish proficiency. • Levelling the playing fields – weeding out unfair competition • In a complex multi-disciplinary environment compliance • could not be generic and once off, it must be: • Specific to the SLA and its • Key Performance Indicators • Swift • Refreshed with regular intervals • Assisting suppliers to Comply

11. Agenda • The ten goals to defray a scary scenario • What will the end result be? • What should we do, in general immediately? • What should we do with work in progress? • What are the first steps for new work? • How do we enforce continuous improvement? • Benefits – from a scary scenario to a win-win scenario • What is the way forward today?

12. WORK IN PROGRESS • CONTINUOUSLY TRACKING PROGRESS AGAINST DELIVERABLES AND TIME SCHEDULES – THREE MILESTONE REPORTS ON VALUE BEING CREATED • Immediate evaluation of value being created • Interim Performance Improvement Proposals • Workshop for pro-active remedies • Value verdict on delivery – • Interim Performance Improvement Proposal & • Workshop for continuous improvement • Value adjudication 3 - 6 months downstream after delivery • Final Performance Improvement Proposal – • Workshop for continuous improvement

13. Agenda • The ten goals to defray a scary scenario • What will the end result be? • What should we do, in general immediately? • What should we do with work in progress? • What are the first steps for new work? • How do we enforce continuous improvement? • Benefits – from a scary scenario to a win-win scenario • What is the way forward today?

14. PROCUREMENT STARTS WITH COMPILING SLA’S Compiling a SLA is the easy part – it comprises needs, rules and do’s and don’ts The real challenge is: CREATING VALUE FOR ALL USERS OF PROCURED GOODS AND SERVICES ENCOURAGING DEVELOPMENT FOR ALL ROLL PLAYERS

15. CONDITIONS FOR EFFECTIVE SLA’S • CORRECT AND PRECISE WORDING • OPEN BOOK AND CONSULTATIVE • INCLUSIVE • BASED ON PROPER NEEDS PROFILE • WRAPPED AROUND: • Realistic milestones • Deliverables that are: • Meaningful, • Visible and • Measurable • Payment structure and penalties that are • Fair • Clearly defined • Agreed

16. Agenda The ten goals to defray a scary scenario What will the end result be? What should we do, in general immediately? What should we do with work in progress? What are the first steps for new work? How do we enforce continuous improvement? Benefits – from a scary scenario to a win-win scenario What is the way forward today?

17. Some components of a typical Performance Improvement Proposal Submitted to suppliers For their continuous improvement

18. The Solution: Q5 How does Q5 add value? VMP: Context of Financial Services – Example Performance Profile

19. Great Business Processes Invest/improve I m p a c t 3 Invest/improve 3 Ry . 22 3 1 Xxx 7 MAINTAIN Loyalty Ry 2. Bxx 22 7 MAINTAIN Loyalty 3.Cxx 1 8 10 Ry 22 16,7,& 9 4. Dxx 1 8 10 24, 7 16,7,& 9 5. Exx 24 24 7. Gxx 8. Hxx Evaluate & control latent problems 9. Ixx POSSIBLE WASTE 10. Jxx 11. Kxx of scarce resources 21 17 21 17 14. Xxx 11,13,& 5 21. Xxx 18 19 25 21 2 23 4 24. Xxx 25. Xxx 20 0 % 25 % 50 % 75 % 85 % 100 % Little Impact MOST on changing value experiences, in the SHORTEST TIME, within current RESOURCE CONSTRAINTS. urgent remedy PERFORMANCE INDEX 72 PERFORMANCE INDEX 64 6. Late delivery 21 17 24. Rel of content

20. The Solution: Q5 Continuous improvement Perceived value increase due to improved performance.

21. 69 110 The Solution: Q5 Q5 adds value – continuous improvement Improved performance is quantified - measurable in exact terms

22. The Solution: Q5 VMP: Example – Summary of Indices BANK / BUS. UNIT AND SERVICE PROVIDER (L = Leading, Con = Control & Sup = Support) MANAGEMENT EMPLOYEE GRATIFICATION SUPPORT BASE LOYALTY PERFORMANCE INDEX FINANCIAL MANAGEMENT (CON), INFORMATION MANAGEMENT (SUP), OPERATIONS (SUP), PROCUREMENT (SUP) & EXTERNAL RELATIONS (SUP) PROCUREMENT (SUP), OPERATION (SUP) ADMIN (SUP) & INFORMATION MANAGEMENT (SUP) FINANCIAL MANAGEMENT (CON), OPERATIONS (SUP), ADMIN (SUP) & PROCUREMENT HUMAN RESOURCE MANAGEMENT (SUP), PROCUREMENT (SUP) MARKETING (L), ETHICAL CONTROL (CON) & ADMIN (SUP) 76 71 60 68 HQ 68 78 Principal Admin Line manager 63 AM 75 68 Prof. Services Tech. Line manager 61 Admin ops 68 Site manager BM 58 69 Tech ops 68 59 Site foreman SM 73 BEST PRACTICE RISK VALUE INDEX SUPPLIER PERFORMANCE 59 62 72 67 Trade Specific Security Authoriser 75 72 69 Business Specific Safety 67 64 Purchaser 60 Fair Trade Threats 66 64 User 51 Trade Ref 66 Weaknesses 64

23. The Solution: Q5 Second Evaluation MANAGEMENT EMPLOYEE GRATIFICATION SUPPORT BASE LOYAL PERFORMANCE INDEX 86 81 70 89.6 BEST PRACTICE RISK SUPPLIER PERFORMANCE 72 82 77 First Evaluation MANAGEMENT EMPLOYEE GRATIFICATION SUPPORT BASE LOYAL PERFORMANCE INDEX 76 71 60 69.6 BEST PRACTICE RISK SUPPLIER PERFORMANCE 62 72 67

24. Agenda The ten goals to defray a scary scenario What will the end result be? What should we do, in general immediately? What should we do with work in progress? What are the first steps for new work? How do we enforce continuous improvement? Benefits – from a scary scenario to a win-win scenario What is the way forward today?

25. BENEFITTING FROM A WIN-WIN SCENARIO COST TO PERFORMANCE - most cost effective suppliers / highest value AS SPECIFIED, ON TIME WITHIN BUDGET – lower cost / risk INSTANTANEOUS BEST-FOR-ME DECISIONS - Vx derived from Px SUSTAINABLE SUPPLIERS - cost driven procurement decisions are negative - rewarding the wrong party for the wrong reasons PROACTIVE REMEDIES - interim evaluations and PIP’s ERADICATE BRIBERY AND CORRUPTION – justify buying decisions and supplier choices DYNAMIC DEVELOPMENT PROGRAMME FOR ALL WEEDING OUT THE ROGUES – insistent poor service

26. Agenda • The ten goals to defray a scary scenario • What will the end result be? • What should we do, in general immediately? • What should we do with work in progress? • What are the first steps for new work? • How do we enforce continuous improvement? • Benefits – from a scary scenario to a win-win scenario • What is the way forward today?

27. Close Next Steps • APPLYING THE PROCESS • Appoint an internal Value Champion to facilitate the implementation process • Sourcing out your compliance function subject to your specific requirements • Applying the Value Management Process to all suppliers for • Work in progress • New work • Provide a list of current and past suppliers • Provide facilities for suppliers to meet • Agree to the wording of invitations stating that: you would: • Work only with compliant suppliers • Be guided by the Performance Indices of your suppliers • Prefer to deal with suppliers eager of establishing loyal relationships with you based on their Fundamental Value • Q5 has been assigned to develop a pool of suppliers to reach for excellence from which you will choose

28. Essential info required • ON A EXCEL SPREADSHEET WITH A • COLUMN FOR EACH OF THE FOLLOWING HEADINGS • (It means there are seven columns.) • Company name • Company telephone number • Contact Person – name & surname (it could be separate) • E-mail address of contact person • Industry type or main focus of business • Company size (large, medium, small, micro) • Active or passive supplier

29. THANK YOU FOR YOUR TIME !