Transcript Negotiation Slides 6

Welcome to Measuring Purchasing Performance
Section III
Buyer
Performance
Measurement
Effective Negotiation
Measuring Purchasing Performance
Measuring the Performance of the
Buyer:
Weighting 30%
Benefits of measuring individual
performance
Buying role within Organisation
objectives
Effective Negotiation
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?
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
What is Buyer Performance?
How well an individual Buyer does
within the Purchasing function:
(i) Own initiative
(ii) In a Team
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
What is the Purpose of
Measuring Buyer Performance?
Effective Negotiation
Measuring Purchasing Performance
 WHY measure Buyer performance?
 Part of the overall business plan
 Vision
 Table of Spending
 Resourcing
 Priorities
 SWOT
 Policy, Planning & Programmes
Effective Negotiation
Measuring Purchasing Performance
Measuring the Performance of the
Buyer:
To establish areas
for opportunity to
use knowledge &
skills, and
development
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
To develop their understanding of:
 Corporate Objectives
Department/Function Objectives
How they fit/Individual Objectives
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
To allow feedback/discussion on:
 Current performance
Future learning
Increasing motivation
Improvement planning
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
To provide a means to:
Provide merit pay awards and
salary review
To identify and resolve:
 Sub-standard performance
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
To identify:
 Individual potential for career
planning and advancement
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
Clear
understanding
of what job
entails
Job is a
contract
Legislation
Buyer Performance
Part of wider
process
Understand
where they fit
Benefits
Higher morale,
motivation &
feeling of
belonging
Job is an
SLA
Benefits
employee &
Wider benefit to
Contribution
organisation
the economy as
to
Effective
a whole
organisation
Communication
Establish
Development, Staff Retention &
learning needs
Reward and
low absenteeism
TNA
Effective Negotiation
Advancement
PDCA
IiP
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
Effective Negotiation
Measuring Purchasing Performance
What does
Performance
Management set out
to achieve?
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
Buyer
Rush
job
Do it because
end of
Performance
we have to
year
Too much
Lack of
Changing targets
pressure and
appropriate
& priorities
slippage
time
allocated
Lack of
Difficulties
communication
Lack
of
Managers don’t
confidentiality
Appraisal
listen to
Managers not
not SMART
feedback
skilled in
Poor
appraisal
Management
Appraisal out of
Managers are
date
biased
Effective Negotiation
Measuring Purchasing Performance
Buyer Performance
Measurement
What?
Effective Negotiation
Measuring Purchasing Performance
 What should be measured?
 Core Competences for Role
 Behaviour
 And
 Performance
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
 What should be measured?
 Core Competences for Role
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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
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
When?
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
How?
Effective Negotiation
Measuring Purchasing Performance
 How will it be measured?
Overall Assessment
Grading & Rating Scales
Informal
Formal
Personality Profiling
Effective Negotiation
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)
Effective Negotiation
Measuring Purchasing Performance
Measuring the Performance of the
Buyer:
Improvement Techniques
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
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
Effective Negotiation
Measuring Purchasing Performance
Who?
Effective Negotiation
Measuring Purchasing Performance
 By whom will it be measured?
 Self
 Colleagues
 Line Manager
 Report
 360 degree
Effective Negotiation
Measuring Purchasing Performance
 By whom will it be measured?
 360 degree
Effective Negotiation
Measuring Purchasing Performance
Buyer 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)
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)
Measuring & Increasing Performance
Effective Negotiation
Measuring Purchasing Performance
Supplier Performance
Buyer
• Exam Questions
Practice exam questions
Effective Negotiation