28 September 2010 | Lindsay Clark
A leading purchasing and supply academic has hit out at procurement benchmarking standards, suggesting companies rate their performance too highly and are not aware of what “world-class” performance means.
This comes despite 72 per cent of SM readers who think it is a valuable performance assessment. Professor Andrew Cox, visiting lecturer at the University of Birmingham, said procurement departments would describe their supplier evaluation methods as “rigorous and robust” when that was far from the case.
“They show you some sort of half-arsed technical and commercial evaluation methodology that has no scoring evaluation, moderation, and validation process.”
In another example, he said, companies benchmarking their power and leverage methodology might use a tool based on five variables. Most professionals were surprised to learn there are benchmarks on the market with 142 variables.
Similarly, they were shocked when they saw what world-class performance was. “If you’ve not seen it, you don’t know what it is,” he added.
Cox chairs the advisory board at the International Institute for Advanced Purchasing & Supply (IIAPS), a non-profit group. The IIAPS was due to present research at this week’s E-World Purchasing & Supply conference in London showing that, where a score of 100 represents world-class procurement performance, most organisations score themselves between 60 and 90. But when audited by the institute, these scores fell by between 10 and 20 points.
There was a wealth of procurement best practice that was hidden from view, Cox said. “On the conference circuit, you see similar people, from similar types of companies. Then look at the number of companies there are in the world that do purchasing. There’s a huge number of people who don’t go to conferences and who don’t use consultancies.”
However, procurement professionals and consultants answering this week’s SM100 survey leapt to the defence of self-assessment benchmarking. Seventy-two per cent said it was a valuable measure of performance.
“Benchmarking should by no means be the only measure of success or performance because there are too many variables,” said Duncan Stirling, HR supplier relationship manager at BT. “However, it comes into its own where there is already recognised underperformance and gives an organisation, department or team something to strive for.”
Shaun Evans, procurement operations and relationship manager at Co-operative Financial Services, added: “It is important to select the right organisations to benchmark against and to be realistic in the assessment, but inevitably most people will tend to look more favourably on their own teams.”
Cox said firms struggled to get help in improving their procurement competence. “You go to a consultancy on the basis of reputation because there is no standard, which is one of the reasons the Institute has been set up.”