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					 Measuring Purchasing
    Performance
         CIPS L4-03 Diploma




              malcolm.harrison@pennwood.org.uk
              www.pennwood.org.uk




8-2010
Welcome, Safety and Security
•Your safety
•Mobiles
•Pennwood – 3 pieces of admin.
•CIPS – your responsibility
•Profex code : ....
•Study Centre rules
•Food and Drinks
•The ‘WBA’ process
3 - Key Learning Objectives

•Measuring the performance of the
Purchasing Function

•Measuring the performance of the
supplier

•Measuring the performance of the buyer
 Measuring the performance
 of the Purchasing Function
Importance and Contribution of the
 Purchasing Function:

Financial aspects – contribution to profit

Strategic – contribution to strategy

Operational – contribution to Supply chain
 Management
 Measuring the performance
 of the Purchasing Function

Compliance and ethics



What can wrong?
 If you don’t measure it .. How
 can you cant manage it?
Measures used in the Purchasing Function

Frequency of measure

Targets

Continuous improvement techniques
 Organising the Purchasing
 Function
Centralised

De-Centralised

By Product

By Client

CLAN
 Reduction of Costs
Economy

Effectiveness

Efficiency
 Information Technology
MRP

ERP

RFID

Exception reports

Vendor rating
 Measuring the performance
 of the Purchasing Function
Review 6 learning outcomes
 Key Learning Objectives

•Measuring the performance of the
Purchasing Function

•Measuring the performance of the
supplier

•Measuring the performance of the buyer
 Selecting the ‘Right’ Supplier

•Large / Small

•OEM, Wholesaler, Retailer....

•Local / Overseas

•Single source – dual source ..

•Sister company / Joint Venture / Consortium
Measuring the performance of
        the supplier

•Vendor Appraisal Techniques

•5 Rights

•Carters 10 C’s

•Evidence required , source, date and
frequency

•Site visits
Financial Stability of Rainbow
             Ltd

•Accounting Reports

•Balance Sheet

•Profit and Loss Account

•Cash flow statement

•P114
 Financial Stability of Rainbow
              Ltd
Profitability: has the business made a good profit
 compared to its turnover?
Return Ratios: compared to its assets and capital
 employed, has the business made a good profit?
Liquidity: does the business have enough money to
 pay its bills?
Asset Usage or Activity: how has the business used
 its fixed and current assets?
Gearing: does the company have a lot of debt or is it
 financed mainly by shares?
 Developing the performance
      of the supplier/s

•Kraljic

•Balanced Score Cards

•Supplier Relationships Models

•Supplier Associations

•Cost Reduction Programmes

•Culture models
 Developing the performance
      of the supplier/s

•After Sales service

•New market development

•Risk sharing

•R&D
 Measuring the performance
 of the supplier
Review 9 learning outcomes
3 - Key Learning Objectives

•Measuring the performance of the
Purchasing Function

•Measuring the performance of the
supplier

•Measuring the performance of the buyer
 Measuring the performance
 of the buyer
The benefits of structured personal
 development plan...

Where are You?
Where are You aiming for?
How do we get there?
How will we measure progress along the
 way?

Who decides?
 Measuring the performance
 of the buyer
What skills / traits should a Buyer have?

Can you measure them?

And .. If they are lacking can they be taught?

Benefits to the company
 Measuring the performance
 of the buyer

The 360 degree 6 monthly Appraisal

Reflective Statements

Peer appraisals
 Measuring the performance
 of the buyer
Assessing Learning techniques
Lecture ... On-the job – shadowing....

Styles of learning
Doing .... Reading .... Listening... Observing..
 Measuring the performance
 of the buyer
Measures of a Buyer...
OTIF, Stock holding values,... Conformance,
30 second audit trail

Management by Objectives and ...Payment by
 results

Balanced Score Card of Measures
 Measuring the performance
 of the buyer
Review 7 learning outcomes
          Review
3 - Key Learning Objectives
•Measuring the performance of the
Purchasing Function

•Measuring the performance of the
supplier

•Measuring the performance of the buyer
 Work Based Assignment
      Preparation

•See Information sheet and website for
examples

				
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posted:11/2/2011
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