Developing an Advanced Competence in Purchasing & Supply

1IIAPS Confidential© IIAPS 2010 All Rights Reserved

Developing an Advanced Competence in Purchasing & Supply

Jeremy Smith([email protected])

Director, Corporate Services

International Institute for Advanced Purchasing & Supply(www.iiaps.org)


CONTENTS

- What is IIAPS

- IIAPS Belt Qualifications

- IIAPS Benchmarking & Corporate Accreditation


Why is Competence Important?These issues affect most organisations:

– Surviving the double dip recession & keeping your job– Creating sustainable supply chains– Managing unforeseen risk– Unblocking supply shortages– Dealing with political & cultural risks– Planning for technological innovation– Reducing costs– Managing value for money– Finding, developing & retaining exceptional staff– Finding reliable suppliers– Developing suppliers collaboratively – Getting internal buy-in & compliance– & Many others…

The more things change the more they remain the same

– The need for:

• Competent People (i.e. trained to world-class standards)

• Managing in World-Class Organisational Processes & Systems (i.e. on-line tools that drive competence amongst managers and create organisational-wide learning & knowledge management)


IIAPS Mission The mission of IIAPS is to raise standards in the purchasing & supply profession

This is achieved by providing benchmarking and competence assessment tools for organisations and individuals

The main activity of IIAPS is the establishment of advanced international standards for purchasing and supply chain professionals worldwide… The Institute's International Black Belt in Advanced Purchasing & Supply

IIAPS Focus

IIAPS at a Glance


The IIAPS Competence Solution

To create Advanced International Standards for Purchasing & Supply requires:

1. Analysis of ALL of the steps, activities & tasks that PSCM Professionals are required to manage when they undertake their roles & responsibilities.

2. An understanding of which methodologies (Academic, Consultant, Practitioner) offer the most comprehensive competence for managers for each step, activity and task.

3. The creation of a world-class (adaptable & flexible) on-line organisational process & system that provides a structure to allow managers:

- to understand what are world-class systems and processes for each step, activity & task

- to be trained in each of the steps, activities & tasks in a world-class system & process

- to be examined and assessed (accredited) as having the competencies to manage world-class systems & processes

- to operationalise these world-class systems and processes appropriately (under changing circumstances)

- to codify all knowledge in order to create shared organisation-wide learning, audit and knowledge management


IIAPS has a strong relationship to many international but also small and medium-sized companies worldwide.

The IIAPS Advisory Board consists of senior industry practitioners and managers from purchasing, supply chain, as well as from HR. They are all committed to shaping the development of the IIAPS Belt Qualifications in the future.

Current advisory board members come from companies such as:

IIAPS Corporate Relationships


IIAPS Belt Qualification

Key characteristics:1) Approach: a 3-step approach(Green – Red – Black Belt). All three steps have to be gone

2) Content: 8-step sourcing process, broken down in 31 learning modules

3) Learning style: online learning plus completion of 4 project reports for each belt (Green and Red Belt – 2.000 words/thesis)

4) Investment: 2.000 USD/belt

IIAPS Benchmarking & Corporate Accreditation

Key characteristics:1) PSCM Index:Benchmarking of current performance against world-class standards in 184 attributes! Result: positioning & transformation report

2) ICA Index:Benchmarking tool to understand individual competence gapsand training needs

IIAPS Service Offers


IIAPS Belt Qualifications


IIAPS Belt Qualifications


To assist candidates IIAPS has developed a 3-stage approach.

This allows candidates to fund their progression in easy stages, while also obtaining an immediate training in world-class practices.

Each of the 3 stages requires the “proof of competence”: 8 assessed project reports and one final theory examination and a practical company related dissertation (“master project thesis”)

International Green Belt International Red Belt International Black Belt

… awarded after satisfactory completion of the 4 Project Reports required as part of the training for the single category management case study in the …learning environment.

… awarded after satisfactory completion of 4 additional Project Reports required as part of the training for the multiple project/new product and complex category management case study

… awarded after satisfactory completion of the final comprehensive examination covering all aspects of the course of study, and the completion of a final company related Dissertation.

IIAPS Stages of QualificationFrom Green to Black Belt


The overall guideline for the IIAPS Belt Qualification is the 8-step category management and strategic sourcing process, as shown below:

SourceMatix is a web-based tool for managing all of the pre-contractual and post-contractual activities and tasks in the purchasing area

Qualification Focus8 Step Sourcing Process


Principles of Category Management & Strategic SourcingSegmentation Analysis Spend Criticality Analysis Strategy Team Selection TechniquesStakeholder Management TechniquesDeveloping the Business Case for Strategic SourcingDefining Business Needs, Value Propositions & KPIsUnderstanding Internal Demand Management LeversUnderstanding Supply Market and Supply Chain Levers Request for Information (RFIs) MethodologiesPurchase Price Cost Analysis (PPCA) Methodologies Commercial Leverage Methodologies Competitive Forces AnalysisPower Positioning AnalysisSupplier Positioning AnalysisBuyer & Supplier Performance Alignment Techniques

Purchasing and Sourcing Portfolio Analysis TechniquesStrategic Source Planning MethodologiesSelecting Make-Buy & Strategic Sourcing OptionsManaging Barriers to Sourcing Strategy Implementation Selecting Tactical & Contractual LeversSelecting Market Testing OptionsPre-Qualifying & Selecting Suppliers for Market Testing Developing the Business Case for Market TestingManaging the Bidding & Market Test Process Managing the Negotiation ProcessDeveloping the Business Case for Contract AwardContract Start-up & Supplier Performance ManagementSourcing Strategy Review & Learning TechniquesSupplier Relationship Management TechniquesRisk, Opportunity & Knowledge Management

Qualification FocusMore than 30 Theory and Practice Modules


The IIAPS solution provides on-line expert simulation environment known as Sourcematix®for training, assessing & accrediting the competence of individuals:

Simulation EnvironmentSourcematix®


Praxis Video ModulesTheory Videos Case Studies for Assessment

An online training solution which is designed to offer highly interactive learning: video teaching, real life case study material, interactive tutorial modules

Learning can take place at any time of the day: before or after work, at the weekend – IIAPS offers a 24/7 learning platform!

The project reports and dissertation still have to be written by you!

Learning Methods20% Video Teaching and 80% Self Learning


Each candidate has to complete 4 Project Reports (of a minimum of 2000 words each) for assessment for each case study being analysedin the Sourcematix® Simulation learning environment.

This work is also available for current and (if required) prospective employers to review. Each of these reports simulates what is good practice when managing in the 8-Step strategic sourcing process.

The learning & assessment methodology is based on ATLAS – Activity & Task Based Learning & Assessment

1st report

2nd report

3rd report

4th report

Sourcing Strategy Business Case

Market Testing Business Case

Contract Award Business Case

Strategy Review & Lessons Learned Report

Project Reports for Belt QualificationFour Reports to be Assessed


How to become a full member of IIAPS?One has to complete all 3 stages of the belt qualification – each stage provides a

different membership status

Full membership provides …- free life access to the IIAPS careers and recruitment service; - all alumni newsletters and linked-in services; - access to any free reports produced on best practice

SIIAPS: Student Membership of the IIAPS

AIIAPS: Associate Membership of the IIAPS

MIIAPS: Full Membership of the IIAPS

Further BenefitsMembership Status of Belt Holders


IIAPS Benchmarking & Corporate Accreditation


Benchmarking Organisational Competence

The IIAPS methodology divides the category management & strategic sourcing process into 8 core steps:


The analysis is provided in chart and tabular form:

Summary Report

The output of The PSCM Index presents the user with a self-assessment benchmark report.

The analysis can be reported at varying levels:

Within CompanyWithin Market SegmentAgainst Similar CompaniesAcross Entire Database

To facilitate this you can obtain detailed and summary reports filtered by variables including:

Industrial SectorTurnoverGeographical FocusNumber of EmployeesOrganisational or Procurement SpendOwnership Structure

Benchmarking Organisational CompetenceThe PSCM Index Reports


PSCM Index Total Score Report

The user can access a number of more detailed reports.

These reports allow the comparison of your organisation with other organisations selected through the use of the dropdown filters.

Score by Section Report

Benchmarking Organisational CompetenceThe PSCM Index Detailed Reports


94.5

Middle Tier

Lower Tier

All

Sect

ors

Food

/Drin

ks

Top Class

Upper C

lassLow

er Class

Bottom

Class

Upper Tier

Middle Tier

Lower Tier

100%

75%

50%

25%

66%

58%

41%

33%

16%

8%

Upper Tier

Upper Tier

Middle Tier

Lower Tier

Upper Tier

Middle Tier

Lower Tier

91%

83%

WORLD CLASS

0%

72.8

93.9

76.5 75.471.2 71.5 72.6

90.7

73.2

79.7

73.6 71.168.4

88.5 87.7

64.362.2 63.5 61.8

94.5

58.7

68.5

All

Sect

ors

Food

/Drin

ks

All

Sect

ors

Aer

ospa

ce/D

efen

ce

Aut

omot

ive

Ban

ks/F

inan

ce/In

sura

nce

Che

mic

als

Con

stru

ctio

n

Con

sum

er G

oods

/FM

CG

Dis

trib

utio

n/Lo

gist

ics

Food

/Drin

ks

Indu

stria

l Man

ufac

turin

g

IT/T

elec

oms

Leis

ure

Indu

strie

s

Met

als/

Min

ing

Oil

& G

as

Phar

mac

eutic

als

Publ

ic -

Inte

rnat

iona

l

Publ

ic -

Nat

iona

l

Publ

ic -

Qua

si

Publ

ic -

Reg

iona

l

Ret

ail

Tran

spor

t

Med

ia/P

ublis

hing

Util

ities

/Ene

rgy

53.448.6

60.4

49.8

55.0

49.955.6 55.6 56.4

59.1

45.7

57.960.4

58.254.7

58.2

52.1

44.4 46.451.7

63.9

49.2 49.1

88.5

Sect

or

53.1Maximum Score

Average Score

Minimum Score

Key:Benchmarking Organisational CompetenceThe PSCM Index – Self Assessment Sector Scores


Middle Tier

Lower Tier

All

Sect

ors

Food

/Drin

ks

Top Class

Upper C

lassLow

er Class

Bottom

Class

Upper Tier

Middle Tier

Lower Tier

100%

75%

50%

25%

66%

58%

41%

33%

16%

8%

Upper Tier

Upper Tier

Middle Tier

Lower Tier

Upper Tier

Middle Tier

Lower Tier

91%

83%

WORLD CLASS

0%

80.2

67.6

79.3

63.4 64.4 65.5

76.4

65.3

69.8

64.1

69.1

64.6 62.3 61.1

70.0 68.5

59.4

51.256.8

54.7

80.2

62.458.7

Food

/Drin

ks

All

Sect

ors

Aer

ospa

ce/D

efen

ce

Aut

omot

ive

Ban

ks/F

inan

ce/In

sura

nce

Che

mic

als

Con

stru

ctio

n

Con

sum

er G

oods

/FM

CG

Dis

trib

utio

n/Lo

gist

ics

Food

/Drin

ks

Indu

stria

l Man

ufac

turin

g

IT/T

elec

oms

Leis

ure

Indu

strie

s

Met

als/

Min

ing

Oil

& G

as

Phar

mac

eutic

als

Publ

ic -

Inte

rnat

iona

l

Publ

ic -

Nat

iona

l

Publ

ic -

Qua

si

Publ

ic -

Reg

iona

l

Ret

ail

Tran

spor

t

Med

ia/P

ublis

hing

Util

ities

/Ene

rgy

63.9

49.8 50.856.7

48.051.7

47.9

55.250.2 52.3 54.1

48.0 50.2 50.1 52.0 52.0 54.148.2

35.2

43.840.0

48.6 46.6

88.5

Sect

or

53.1Maximum Score

Average Score

Minimum Score

Key:Benchmarking Organisational CompetenceThe PSCM Index – IIAPS Audited Sector Scores


Self-Assessment

(%)

Newpoint Audit (%)

Variance (%)

Upper Class / Upper Tier


Upper Class / Lower Tier

Current Class Position

(Newpoint Audit)

Upper Class /Middle Tier

Upper Class / Middle Tier







Lower Class / Upper Tier






74.0

73.4

56.8

75.0

67.7

50.0

68.8

69.4

55.9

62.5

41.7

61.7

77.9

68.8

63.3

71.2

65.0

68.0

73.4

56.8

62.5

58.5

50.0

62.5

65.7

55.9

58.9

41.7

63.3

73.1

68.8

58.3

69.3

61.0

-6.0

-

-

-12.5

-9.1

-

-6.3

-3.7

-

-3.6

-

+1.7

-4.8-

-5.0

-1.9

-4.0

A: Business Buy-in and Role

B: Stakeholder Management

C: Strategic Sourcing Process

D: Organisational Structure

E: Systems and Processes

C1: Strategic Understanding

C2: Defining Business Needs

C3: Supply Market Analysis

C4: Sourcing Option Dev. & Selection

C5: Tender & Market Test

C6: Final Supp. Selection & Cont. Award

C7: Contract Start-up & SPM

C8: Transition & Exit

D1: Organisational Effectiveness

D2: Individual Competences

D3: Organisational Alignment

Total

Top Score in Your Sector

(%)

78.0

73.4

76.5

69.6

62.2

71.7

72.9

69.4

72.1

69.3

75.0

76.7

76.0

93.8

69.6

75.9

70.0

Top Score in PSCM Index

(%)

95.0

81.3

85.6

70.5

74.4

74.3

74.3

72.2

85.3

87.5

75.0

95.0

88.5

97.0

75.5

92.9

80.2

89.0

90.6

90.2

95.5

86.6

89.5

97.9

93.5

98.0

86.5

88.9

93.3

100.0

100.0

91.5

98.1

92.1

Potential Best in Class for Your Sector

Benchmarking Organisational CompetenceThe PSCM Index – IIAPS Audited Scores for a Client


When undertaking an audited analysis of the user’s self-assessment IIAPS also provides a detailed report on recommendations for improvement, as outlined in the Transformation Matrix opposite.

The matrix shows the following segmentation of transformation options:

– High Value / Easy to Implement

– High Value / Difficult to Implement

– Low Value / Easy to Implement

– Low Value / Difficult to Implement

IIAPS also provides costed options for supporting transformation initiatives.

Potential Value Improvement

Ease

of I

mpl

emen

tatio

n

Low High

Easy

Diff

icul

tSupplier Selection &

Contract Award Improvements

User Buy-In / Cross-

Functionality / Early Involvement

MIS Realignment

Functional Silo Reorganisation

User and PSCM Proactive Sourcing Training

User On-Line Common Sourcing

Process & Handbook

Reactive Sourcing Training

Embed Demand Management Competence

Codify Knowledge

Embed Supply Market Analysis

Competence

Establish Sourcing Options

Categorisation Approach

Make/Buy & Collaboration

Review

Category Mgmt Segmentation

User & PSCM Initial Orientation

Training

Transition & Exit Improvements

Tender & Market Test Improvements

Embed Continuous

Improvement & KPI Culture Internally

Embed SPM/SRM

Competence

Diversity & Inclusion Planning

Benchmarking Organisational CompetenceThe PSCM Index – IIAPS Transformation Report


Personal Profile & Experience

Procurement Competencies

Individual Motivation

Your Current Experience 7 QuestionsOther PSCM Experience 4 Questions

Other Non-PSCM Experience 4 Questions

Strategic Understanding & Segmentation 9 QuestionsDefining Business Needs & Demand Options 13 Questions

Supply Market Analysis & Assessment 19 QuestionsSourcing Option Development & Selection 14 Questions

Market Test 10 Questions

Performance Management 17 QuestionsRelationship Transition & Exit 4 Questions

Morale & Energy 3 QuestionsPerformance & Potential 3 QuestionsTraining & Development 3 Questions

138 Attributes

Logistics & Supply Chain Management 23 Questions

Negotiation & Contract Award 5 Questions

Benchmarking Individual CompetenceThe ICA Index


The assessment is undertaken after the organisation has defined its role profiles. These define the skills and experience required for each purchasing and supply role in the organisation.

Support for buying, supply chain, category and supplier teams; data gathering, analysis and transactional activities

Cost AnalystBuyer Planner

Assistant / Junior Buyer1

Tactical and operational purchasing; supply chain and post-contract supplier performance; support for colleagues and stakeholdersBuyer / Vendor Manager 2

Shaping sourcing strategies and source plans; analysing supply markets; supplier negotiation and development of strong local relationships

Category / Commodity Specialist / Senior Buyer / Purchasing

Executive3

Major project and key supplier management; breakthrough value creation; outsourcing

Category / Commodity Manager4

Portfolio management; flow down of strategy; building teams; managing resources; initiatives & stakeholders

VP Strategic Sourcing / Category/Commodity DirectorSenior Procurement Manager

5

Shaping operational and functional strategies; implementing business decisions, leading teams and influencing senior stakeholders

General Manager Procurement, Regional Procurement Head /

Procurement Director6

Operational excellence and global delivery; risk management, innovation value and cost; management; visioning and selling thefunction

Senior Vice President /non-board CPO

7

Shareholder value; investor relations; business vision, strategy and direction; revenue, profit and earnings per share (EPS) growth and corporate governance

C-level Board Director, Executive CPO8

Focus of AttentionTypical Roles

Support for buying, supply chain, category and supplier teams; data gathering, analysis and transactional activities

Cost AnalystBuyer Planner

Assistant / Junior Buyer1

Tactical and operational purchasing; supply chain and post-contract supplier performance; support for colleagues and stakeholdersBuyer / Vendor Manager 2

Shaping sourcing strategies and source plans; analysing supply markets; supplier negotiation and development of strong local relationships

Category / Commodity Specialist / Senior Buyer / Purchasing

Executive3

Major project and key supplier management; breakthrough value creation; outsourcing

Category / Commodity Manager4

Portfolio management; flow down of strategy; building teams; managing resources; initiatives & stakeholders

VP Strategic Sourcing / Category/Commodity DirectorSenior Procurement Manager

5

Shaping operational and functional strategies; implementing business decisions, leading teams and influencing senior stakeholders

General Manager Procurement, Regional Procurement Head /

Procurement Director6

Operational excellence and global delivery; risk management, innovation value and cost; management; visioning and selling thefunction

Senior Vice President /non-board CPO

7

Shareholder value; investor relations; business vision, strategy and direction; revenue, profit and earnings per share (EPS) growth and corporate governance

C-level Board Director, Executive CPO8

Focus of AttentionTypical Roles

Create your own Role Profiles or Select the one

closest to your current role

Benchmarking Individual CompetenceBenchmarking Against Role Profiles


Reports are made at a number of different levels:

Reports are made at a number of different levels:

Against World-Class Standards

Against Best-in-Class Standards

Within Role

Within Company

Total ScoreTotal Score

BasicBasic AdvancedAdvanced

Benchmarking Individual CompetenceIndividual Competence Assessment Reports


Your Results

Role: Procurement DirectorRequired score boundaries: 55%-70%

The Individual Competence Assessment (ICA) has awarded you 49%. This was above the average score (41%), but below the target score profile for your role.

Analysis of your basic sourcing competencies shows that you are amongst the top performers in your organisation, scoring 64%.

Analysis of your advanced sourcing competencies show that you are in the under-performing against other individuals, scoring only 28%.

According to you role, your total score is below what is required, with particular attention needed on developing advanced sourcing competencies.

Your Results

Role: Procurement DirectorRequired score boundaries: 55%-70%

The Individual Competence Assessment (ICA) has awarded you 49%. This was above the average score (41%), but below the target score profile for your role.

Analysis of your basic sourcing competencies shows that you are amongst the top performers in your organisation, scoring 64%.

Analysis of your advanced sourcing competencies show that you are in the under-performing against other individuals, scoring only 28%.

According to you role, your total score is below what is required, with particular attention needed on developing advanced sourcing competencies.

Your Role ProfileYour Role Profile Based on Standard IIAPS Criteria



Peter performed well within his role profile. He scored strongly in the Basic level questions and also scored well in the Advanced level questions, showing promise for future competence development and subsequent promotion in the future.

Main skills gaps within role profile:

– Strategic Understanding

– Sourcing Option Development & Selection

– Relationship Transition

Peter Smith – Buyer

BasicBasic AdvancedAdvanced

Total ScoreTotal Score



The Skills and Competence Gap Analysis Report shows the gaps between the user’s current skills and experience in PSCM and

defined world-class and best-in-class competence standards.

The Team Overview Report allows the user to compare their overall, basic and advanced ICA scores with other individuals in the organisation.

The comparison can be made against a number of pre-defined characteristics (e.g. PSCM role, business function, business unit or department).

Benchmarking Individual CompetenceCorporate Overview Reports and Competence Gaps


The IIAPS Competence Solution - Summary

The IIAPS advanced international standards are unique because:

1. They are based on rigorous standards, developed by academics, consultants and practitioners working together

2. The standards can be failed, and are based on fail / pass / merit / distinction

3. There are no exemptions for previous study

4. The qualifications cannot be achieved by other routes5. The qualifications are based on a visible & recorded demonstration of competence in an

environment that simulates the ‘real world’ experience of managers

6. Competence has to be demonstrated for ALL, pre & post contractual steps, activities & tasks, not just for some of them.

7. The Green Belt requires a basic competence in single category management & strategic sourcing

8. The Red Belt requires a demonstration of competence in complex project/new product & multiple category management & strategic sourcing

9. The Black Belt requires a demonstration of competence in theory and a practical application of competence in a real world situation

10. The competence training & standards is delivered globally, and the case material is adaptable for any unique corporate case study requirements

32IIAPS Confidential© IIAPS 2010 All Rights Reserved© IIAPS 2010 All Rights Reserved

Contacts

International Institute for Advanced Purchasing & Supply

EMEA Office

180 PiccadillyLondonW1J 9HF, UKTel : +44 (0)20 7917 6842Fax : +44 (0)20 7439 0262

Email: [email protected]

Americas Office

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Asia Office

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