If you are wondering how good you are in managing your purchasing department performance, this post might be of some interest. Below you will find listed 8 questions – and the associated set of 4 possible answers from 1 to 4, 1 being the worse answer and 4 the best – I use to go through when evaluating how Performance is managed in a Purchasing entity. It is a nice tool to understand quickly the situation high level, or if you want to compare or benchmark several entities and a very pleasant tool to use because ‘back to the basics’, straightforward and at the right level (not too precise). Results are easily converted into a graph for communication purposes.
1. Are performance targets differentiated by type of supply relationship and include both innovation and delivery dimensions?
- Performance not monitored
- Uniform set of performance measures, delivery only
- Uniform set of performance measures, delivery and innovation
- Differentiated performance measures (partners, preferred suppliers, other suppliers), delivery and innovation
2. Are joint targets set by partners/preferred suppliers and communicated to them?
- No targets set by partner/preferred supplier
- Targets are set for partners/preferred suppliers, delivery only
- Targets are set for partners/preferred supplier, delivery and innovation
- All targets are communicated to partners/preferred suppliers and partners/preferred suppliers are committed to them
3. Are targets set by commodity and correlated to corresponding supplier targets?
- No targets are set by article group/commodity
- Targets are set, delivery only
- Targets are set, delivery and innovation
- Targets are set, delivery and innovation and correlated to specific supplier development programme targets
4. Are purchasing targets set for the “Business” and correlated to corresponding commodity targets?
- No purchasing targets set for the Business Entity
- Targets set, delivery only
- Targets set, delivery and innovation
- Targets set, delivery and innovation; reconciled with bottom-up commodity targets to ensure achievability
5. Is performance monitored at supplier, commodity and business level and corrective action plans implemented?
- Performance not monitored
- Only supplier and Business Entity performance is monitored, no monitoring of commodity targets
- Supplier, commodity and Business Entity performance is monitored, little insight is revealed into the reason for variances (volume, price, exchange rates for commodity or Business Entity level, specific operating indicators for supplier targets …)
- Supplier, commodity and Business Entity performance is monitored, good insight is revealed into the reason for variances, (i.e. volume, price, exchange rates for commodity or Business Entity level, specific operating indicators for supplier targets
6. Are there Performance Reports comparing targets with actuals at supplier, commodity/article groups, business level?
- No documented performance reports on purchasing performance
- Performance reports at supplier and Business Entity level only, delivery only (actual vs target)
- Performance reports at all levels (supplier, commodity and Business Entity), delivery only (actual vs target)
- performance reported at all levels, delivery and innovation (actual vs target)
7. Are there Variance reports identifying reasons for non conformance against plan?
- No variance reports
- Variance reports at supplier and Business Entity level, delivery only; describing reasons to gap (volume, price, exchange rate, …)
- Variance reports at all levels, delivery only; describing reasons for gap
- Variance reports at all levels, delivery and innovation; describing reasons for gap and leading to actionable corrective plan
8. Are there Corrective action plans specifying how to bridge the gap?
- No corrective action plans exist
- Fragmented/transactional corrective action plans, does not prioritise based on urgency and value to the Business Entity
- Comprehensive corrective action plans, linking plans to required overall Business Entity requirements
- Comprehensive corrective action plans, linking plans to required overall Business Entity requirements and reviewed on a regular base with stakeholders
Hi Jean-Phillipe,
I am very impressed with the questions you are suggesting for measuring supplier performance in an SRM environment. I am in the process of completing MSc Supply Chain Management and have chosen SRM establishment as dissertation subject.
I would very much welcome the opportunity to use your suggestions as basis of questionnaire if you would permit me to do so.
I am in LinkedIn if you are interested in reviewing my details.
Best Regards,
Allan Wright MBA, MCMI, MCIPS