Performance Management for Strategic Procurement

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Performance Management for Strategic Procurement

• Ken Cole FCIPS
• LCE Director
• 3rd November 2005

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Why was this undertaken?

• Demand for fewer and focused, indicators that are
  workable
• Progression towards a standardised approach
• Need to measure strategic contribution rather
  than operational outcomes

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Consultation Process

• Workshop on 25th May attended by 25 Boroughs plus
  OGC and others
• Society of London Treasurers (Gershon Sub Group)

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What should we be seeking to measure and why?
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Procurement Scope
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Upstream emphasis

• Upstream adds value
• Planning, specification, supplier selection
• Risk assessment, contingencies, negotiation
• Contract features
• Downstream adds cost
• Measurement, expediting, returns
• Disposal

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Supply Positioning
Risk
Bottleneck ensure suppliese.g. specialist care
provision, interpreters, specialist
components/services
Strategiccontract/supplier managemente.g.
outsourcing, care provision, housing provision,
waste management, works

Routine minimum attention e.g. stationery,
courier services, general maintenance supplies,
printing, cleaning materials
Leverage drive for savingse.g. IT, vehicles,
utilities, advertising, temporary staff
Value
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London Procurement (2003/4)
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Making Savings
Risk
Bottleneck Invest in Securing Supply NO
SAVINGS Cost Avoidance
Strategic Value for MoneyCost Avoidance 2-5
cashable saving per project, estimate 10 spend
reviewed p.a.

Routine Efficiency SavingsAggregation lt1
cashable saving on total spend
Leverage AggregationQuick WinsTake
Advantage!! 10-15 cashable saving per project,
estimate 20 spend reviewed p.a.
Value
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Categories of procurement indicators
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Tiered Indicators

• Strategic - indicators that cover key outcomes
  such as quality and value as well as overall
  contribution of the procurement function to the
  organisations efficiency and effectiveness
• Operational indicators that show the results of
  a process or how internal resources are deployed
• External relating to targets set by central
  government or other external body

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Outcomes
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Issues Encountered

• Widespread agreement to concentrating on
  strategic indicators
• Most current procurement indicators are imposed,
  labour intensive to measure, and do not
  contribute to core business outcomes
• Major difficulty in measuring SME/Sustainability
  outcomes
• Need to agree on core indicators and allow
  individual Boroughs to add to list
• Indicators will change as the business matures
  not static

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Supplier Tracking

• Effectiveness of Supplier Database

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Thank you for your time

• www.lcpe.gov.uk
• 020 7934 9967 (O)
• 07721 556537 (M)