Welcome to Measuring Purchasing Performance

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Welcome to Measuring Purchasing Performance

• Section III
• Buyer
• Performance
• Measurement

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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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Measuring Purchasing Performance

• Buyer Performance Measurement
• Why measure Buyer performance?
• What should be measured?
• How will it be measured?
• By whom will it be measured?
• Benefits of measuring?

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Measuring Purchasing Performance
Buyer Performance
What is Buyer Performance?

• How well an individual Buyer does within the
  Purchasing function
• Own initiative
• In a Team

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Measuring Purchasing Performance
Buyer Performance
What is Buyer Appraisal?
Buyer Appraisal is the review of (i) individuals
performance and (ii)assessment of their potential
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Measuring Purchasing Performance
Buyer Performance
What is the Purpose of Measuring Buyer
Performance?
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Measuring Purchasing Performance

• WHY measure Buyer performance?
• Part of the overall business plan
• Vision
• Table of Spending
• Resourcing
• Priorities
• SWOT
• Policy, Planning Programmes

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Measuring Purchasing Performance

• Measuring the Performance of the Buyer

Strengths
Weaknesses
To establish areas for opportunity to use
knowledge skills, and development
O
T
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Measuring Purchasing Performance
Buyer Performance

• To develop their understanding of
• Corporate Objectives
• Department/Function Objectives
• How they fit/Individual Objectives

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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

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Measuring Purchasing Performance
Buyer Performance

• To allow feedback/discussion on
• Current performance
• Future learning
• Increasing motivation
• Improvement planning

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Measuring Purchasing Performance
Buyer Performance

• To provide a means to
• Provide merit pay awards and salary review
• To identify and resolve
• Sub-standard performance

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Measuring Purchasing Performance
Buyer Performance

• To identify
• Individual potential for career planning and
  advancement

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Measuring Purchasing Performance

• Benefits of measuring Buyer performance?
• Individuals 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

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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 LD and performance
• Motivates

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Measuring Purchasing Performance
Buyer 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
Contribution to organisation
Wider benefit to the economy as a whole
Effective Communication
Establish learning needs TNA
Development, Reward and Advancement
Staff Retention low absenteeism
PDCA
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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 its done
• Confrontational
• Once-a-year tick in the box
• No meaningful follow up or opportunities

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Measuring Purchasing Performance

• What does Performance Management set out to
  achieve?

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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

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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

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Measuring Purchasing Performance
Buyer 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 dont listen to feedback
Appraisal not SMART
Managers not skilled in appraisal
Poor Management
Appraisal out of date
Managers are biased
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Measuring Purchasing Performance

• Buyer Performance
• Measure what, when how?

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Measuring Purchasing Performance

• Buyer Performance Measurement
• What?

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Measuring Purchasing Performance

• What should be measured?
• Core Competences for Role
• Behaviour
• And
• Performance

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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

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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

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Measuring Purchasing Performance

• What should be measured?
• Core Competence Capable of
• being measured reliably and consistently
• Differentiating among individuals
• Being in the power of individual
• Acceptable as fair relevant

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Measuring Purchasing Performance

• What should be measured?
• Core Competences for Role
• Behaviour
• Creativity, innovation, judgement, inclusivity,
  team working, adaptability, responsibility,
  accountability

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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

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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

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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

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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

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Measuring Purchasing Performance

• Buyer Performance
• What to appraise?
• Read notes on Supplier Review in relation to SLAs
  for comparison

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Measuring Purchasing Performance

• When?

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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

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Measuring Purchasing Performance

• How?

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Measuring Purchasing Performance

• How will it be measured?
• Overall Assessment
• Grading Rating Scales
• Informal
• Formal
• Personality Profiling

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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)

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Measuring Purchasing Performance

• Measuring the Performance of the Buyer
• Improvement Techniques

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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

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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

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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

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Measuring Purchasing Performance

• Who?

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Measuring Purchasing Performance

• By whom will it be measured?
• Self
• Colleagues
• Line Manager
• Report
• 360 degree

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Measuring Purchasing Performance

• By whom will it be measured?
• 360 degree

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Measuring Purchasing Performance
PDCA not just once a year

• Buyer Performance
• Measuring Increasing Performance

Objectives Based on department targets
objectives e.g. Reduce costs by 20 in next 12
months (SMARTER)
Targets Based on business department targets,
e.g. increased profits by 20 in next 12 months
Training Development and IiP will include what
is necessary for current role preparation for
improvement, change, advancement, etc. (CIPS)
KPIs Agree and take responsibility for
completion within plan timetable e.g. Reduce
non-contracted supplier base by 5 in 3 months
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Measuring Purchasing Performance

• Supplier Performance
• Buyer
• Exam Questions
• Practice exam questions