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Welcome to Measuring Purchasing Performance

Welcome to Measuring Purchasing Performance. Section III Buyer Performance Measurement. Measuring Purchasing Performance. Measuring the Performance of the Buyer: Weighting 30%  Benefits of measuring individual performance  Buying role within Organisation objectives.

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Welcome to Measuring Purchasing Performance

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  1. Welcome to Measuring Purchasing Performance • Section III • Buyer • Performance • Measurement

  2. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Weighting 30% •  • Benefits of measuring individual performance •  • Buying role within Organisation objectives

  3. Measuring Purchasing Performance • Buyer Performance Measurement • Why measure Buyer performance? • What should be measured? • How will it be measured? • Bywhom will it be measured? • Benefits of measuring?

  4. Measuring Purchasing Performance Buyer Performance What is Buyer Performance? • How well an individual Buyer does within the Purchasing function: • Own initiative • In a Team

  5. Measuring Purchasing Performance Buyer Performance What is Buyer Appraisal? Buyer Appraisal is the review of (i) individual’s performance and (ii)assessment of their potential

  6. Measuring Purchasing Performance Buyer Performance What is the Purpose of Measuring Buyer Performance?

  7. Measuring Purchasing Performance • WHYmeasure Buyer performance? • Part of the overall business plan • Vision • Table of Spending • Resourcing • Priorities • SWOT • Policy, Planning & Programmes

  8. Measuring Purchasing Performance • Measuring the Performance of the Buyer: Strengths Weaknesses To establish areas for opportunity to use knowledge & skills, and development O T

  9. Measuring Purchasing Performance Buyer Performance • To develop their understanding of: • Corporate Objectives • Department/Function Objectives • How they fit/Individual Objectives

  10. Measuring Purchasing Performance Buyer Performance • To agree the expected performance: • Based on procurement targets • What good performance looks (performance indicators) • Learning & Development needs and training plan

  11. Measuring Purchasing Performance Buyer Performance • To allow feedback/discussion on: • Current performance • Future learning • Increasing motivation • Improvement planning

  12. Measuring Purchasing Performance Buyer Performance • To provide a means to: • Provide merit pay awards and salary review • To identify and resolve: • Sub-standard performance

  13. Measuring Purchasing Performance Buyer Performance • To identify: • Individual potential for career planning and advancement

  14. Measuring Purchasing Performance • Benefits of measuring Buyer performance? • Individual’s personal development, inclusivity & morale • Management of team performance, staff promotion & recruitment & retention, the right training provision, keeping pace with change & continuous productivity improvement • Organisation performance and competitive advantage

  15. Measuring Purchasing Performance • Benefits of measuring Buyer performance for the Individual? • Clarity and Conformity • Clear goals, targets & standards • Support: Regular & Relevant feedback • Fair basis for comparison • Opens up discussion • Support for L&D and performance • Motivates

  16. Buyer Performance Measuring Purchasing Performance Clear understanding of what job entails Part of wider process Higher morale, motivation & feeling of belonging Understand where they fit Job is a contract Benefits Job is an SLA Legislation Benefits employee & organisation IiP Wider benefit to the economy as a whole Contribution to organisation Effective Communication Establish learning needs TNA Development, Reward and Advancement Staff Retention & low absenteeism PDCA

  17. Measuring Purchasing Performance • Limitations of appraising Buyer performance? • Past experience/perceptions • Seen as pointless form filling • Bureacracy • One-sided/blame culture • Only considers negatives • Out of date before it’s done • Confrontational • Once-a-year tick in the box • No meaningful follow up or opportunities

  18. Measuring Purchasing Performance • What does Performance Management set out to achieve?

  19. Measuring Purchasing Performance • Performance management? • To define: • Knowledge, skills, performance behaviour and targets • Looking for best results: • being forward looking, on-going activity, collaborative in nature • Appraisal: • Comparison of performance objectives and performance improvement

  20. Measuring Purchasing Performance • Limitations of performance management? • Past experience/perceptions • Low priority • More pressing things to be done • Waste of time • Lack of structure and relationship with organisation strategy & objectives • Employees can be treated unfairly • Confidentiality might be breached • Poor softer management skills • Once-a-year tick in the box

  21. Buyer Performance Measuring Purchasing Performance Rush job end of year Do it because we have to Too much pressure and slippage Lack of appropriate time allocated Changing targets & priorities Difficulties Lack of communication Lack of confidentiality Managers don’t listen to feedback Appraisal not SMART Managers not skilled in appraisal Poor Management Appraisal out of date Managers are biased

  22. Measuring Purchasing Performance • Buyer Performance Measurement • What?

  23. Measuring Purchasing Performance • What should be measured? • Core Competences for Role • Behaviour • And • Performance

  24. Measuring Purchasing Performance • What should be measured? • Quality & Effectiveness of Service • Customer Satisfaction (E/I) • Targets achieved (financial + other) • Team interactions/social skills • Training and Development needs • Level of supervision required

  25. Measuring Purchasing Performance • What should be measured? • Core Competences: Performance • (Quantitative): Productivity, P2P error rates, customer satisfaction on deliverables • (Qualitative) Customer satisfaction, quality, team working, relationships & partnering, wider focus

  26. Measuring Purchasing Performance • What should be measured? • Core Competences for Role • Strategic thinking • Leadership & getting best from staff • Impact on wider business • Managing & Developing • Delivering Results • Customer Focus • Problem Solving & Judgement • Taking a Wider Perspective • Working with Others • Communication & Influencing • Learning & Development (self & staff) • Managing internal & external relationships • Managing Self, Others & Resources

  27. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Purchasing role within Organisation objectives: • Operational Team Quantified Objectives/targets ? • Increase orders processed • Reduce wastage • Maintain appropriate inventory levels

  28. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Purchasing role within Organisation objectives: • Operational Team Performance Quantified: Objectives/targets ? • Time to process orders/enquiries • Qualitative: Standards, specifications, justified, ROI, compliance, enviromental

  29. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Purchasing role within Organisation objectives: • Project Team Performance • Quantified: Objectives/targets ? • To time, to quality to cost • Qualitative: Supplier environmental & ethical performance

  30. Measuring Purchasing Performance • When?

  31. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • From start of the appraisal cycle • On-going (not just annual event) • Before training takes place • After training takes place • Before taking on new roles • During learning curves

  32. Measuring Purchasing Performance • How?

  33. Measuring Purchasing Performance • How will it be measured? • Overall Assessment • Grading & Rating Scales • Informal • Formal • Personality Profiling

  34. Measuring Purchasing Performance • How will it be measured? • Appraisal (Formal/Informal) which provides a uniform standard/ template to measure individual: • Skills • Knowledge • Strengths & Weaknesses • Investors in People (IiP)

  35. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Improvement Techniques

  36. Measuring Purchasing Performance • Improvement Techniques • Job holders must know what is expected of them and what key performance looks like • Line managers are responsible for explaining what standards of performance are required and what the job holder needs to deliver • Disputes should be resolved promptly

  37. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Improvement Techniques • Management by Objectives & fair criteria • Lysons & Farrington, 2006 • Effective appraisal system needs: • Acceptability, Achievability, Appropriate, Comprehension, Continuity, Credibility, Cost • & Flexibility • See also table 9.3/page 151

  38. Measuring Purchasing Performance • Measuring the Performance of the Buyer: • Improvement Techniques • Guidance & Support/ IiP • Set procedures explained/Training • Plan SMARTER objectives • Best use of high work standards • Quality checks_ Accountability/SW • Honest/balanced feedback • Behaviour impact_ Responsible

  39. Measuring Purchasing Performance • Who?

  40. Measuring Purchasing Performance • Bywhom will it be measured? • Self • Colleagues • Line Manager • Report • 360 degree

  41. Measuring Purchasing Performance • Bywhom will it be measured? • 360 degree

  42. Measuring Purchasing Performance PDCA not just once a year Targets: Based on business & department targets, e.g. increased profits by 20% in next 12 months Objectives: Based on department targets & objectives e.g. Reduce costs by 20% in next 12 months (SMARTER) • Buyer Performance • Measuring & Increasing Performance KPIs: Agree and take responsibility for completion within plan & timetable e.g. Reduce non-contracted supplier base by 5% in 3 months Training & Development and IiP will include what is necessary for current role & preparation for improvement, change, advancement, etc. (CIPS)

  43. Measuring Purchasing Performance • Supplier Performance • Buyer • Exam Questions • Practice exam questions

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