Procurement has become a crucial part in saving money, adding value, and profitability for companies. Successful procurement groups need to be able to identify experts to work with. These experts are pivotal in the success of the company. Despite the fact that experts provide great value to companies, most of the time the inexperienced or low performing vendors win the jobs.

How is this possible? It would seem like most procurement groups don’t have an accurate way of identifying experts. This is why our team utilizes theĀ  Performance Information Procurement System (PIPS). PIPS provides a simple method for clients to differentiate vendors based on expertise. The method involves using performance measurements. Performance measurements is a way that vendors can accurately display their ability to minimize risk, maximize savings, and perform at a high level. These measurements need to be non-technical and simple enough for the clients to understand. Along with being simple, the performance measurements need to be specific to the project they are bidding on. These metrics are used to prove the a vendor has high performance.


For example:

Project Requirements:

  • Software package for ERP System
  • Number of entries per year: 20,000
  • Number of existing software/platforms integrated into system: 6
  • Number of heavy users: 20
  • Number of organizations using system: 10
  • Average number of trained personnel: 2

Performance Metrics of a vendor:

PM has completed two projects in the last three years with following metrics:

  • ERP systems for two government organizations, $25M scope, time and cost deviation is less than 1%, customer satisfaction at 9.5/10.0
  • Each project has average of five existing platforms that need to integrate into, 10 organizations, 5 heavy users, 20K transactions per month, 1 maintenance manager

By utilizing simple but specific performance measurements, vendors can accurately show their level of expertise. When vendors can show clearly their expertise, it makes it easy for clients to choose the best vendor. If used correctly, performance measurements can help procurement groups to accurately identify experts. These experts will ultimately provide services that will save money, add value and increase profitability to a company. Performance measurements are essential for both clients and vendors to work effectively with each other.

 

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How to use performance measurements?
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One thought on “How to use performance measurements?

  • August 11, 2016 at 12:31 pm
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    Dean, I always enjoy listening to you speak! This was a great presentation and is what happens in the “real” world. Thanks for sharing.

    Reply

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