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Contract & Procurement Metrics

January 25, 2010

The subject of cycle times is – quite rightly – a source of regular debate for our community. After all, one of the most common user complaints is that we are too slow, that the process takes too long.

“Ah yes”, is the regular response, “but the cycle time is out of our control”. A recent IACCM member question gave a couple of excellent examples: “Naturally there are numerours factors to be considered during the process, including but not limited to, should long periods of inactivity from the Supplier be included within the measurement, should scope changes reset the clock”.

Similar comments come from sales contracting groups, with the customer of course depicted as the culprit.

These attitudes miss the point of benchmarking – and represent a lost opportunity for contracts and procurement groups to show their value to the business. The issue here is that time equals lost opportunity and increased risk. As I observed in my reply: “In the end, the factors you mention are part of the process and like other steps, they must be open to improvement. But of course they will not be improved unless they are measured, so I strongly recommend that you treat these ‘exception areas’ as the red herring that they are. The cycle time is the cycle time. If it turns out that supplier delays are making you uncompetitive or unresponsive to business need, you should be thinking how to fix this quality problem, not to use it as an excuse for poor performance. For example, what is to stop you adding a ‘speed of response’ metric into your bid criteria? This is, after all, an important issue; if suppliers really don’t care to be responsive when they are trying to win your business, what will they be like once the contract is signed?”

The issue of scope changes is also very interesting. Who controls scope? In my experience, it is not usually the contracts or procurement groups. So if it regularly changes (and we all agree that is not a good thing), then why is that happening? Our role should be to force an investigation into the causes of poorly defined scope and to promote improvement. We should be assisting the real culprits to improve – or otherwise highlighting the issue to executive management.

If we fail to grasp opportunities to take ownership and responsibility for business improvement, our value will always be open to question. We will always be the victims of claims by others that WE are the cause of avoidable delay – and no matter how loud our protestations, the mud will often stick.

  1. LaDona Herrera permalink

    Very well stated. This is a current topic and the only way to show value is via scorecard that highlights tasks out of scope with a weighted average of the risks to executive management.

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