Leadership Practices in purchasing

1.

Leadership Practices in
purchasing
Confidential questionnaire
February 1997
Version 3
Copyright 1996
A.T. Kearney, Inc.
A.T. Kearney 7/17030/1/B

2.

Table of contents
Section
Page
I
Instructions
3
II
Procurement Strategy Development
4
III
Procurement Organization
16
IV
Sourcing Process
22
V
Supplier Management/Development
26
VI
Day-To-Day Purchasing/
Controlling
31
VII
Performance Management
34
VIII
Information Management
37
IX
Additional Information
40
A.T. Kearney 7/17030/2/B

3.

I. Instructions
Purpose
• This questionnaire is designed to be completed by procurement management with the
support of other functional organizations as appropriate. Along with quantitative data
collection, the information from the questionnaire will help A.T. Kearney to
—Assess your procurement practices for comparison with A.T. Kearney Leadership
Practices in Procurement benchmarks
—Identify and quantify opportunities for improvement and cost reduction
• All data will be treated as strictly confidential
• It is important that all questions be answered completely in order for A.T. Kearney to
develop valid comparisons and improvement opportunities
Questionnaire completion
• This questionnaire can be completed either as part of a face-to-face interview with A.T.
Kearney consultant(s) or individually
• This questionnaire is intended to be completed by procurement executives across
business units. Each separate purchasing group should complete the questionnaire in
full
• The participation of others outside the procurement function engaged in significant
procurement activities is encouraged as well
• Approximate answers will suffice when answering quantitative questions
• Please attach any documents you believe would be helpful in clarifying your responses,
marking those responses with the page and number of the question they refer to
• At the end of each section, there is space for additional comments
Principal respondent
Name
Title
Company
Business Unit/Division
Address 1
Address 2
City
State/Province
Country
Mail Code
Region
Phone
Fax
E-Mail Address
A.T. Kearney 7/17030/3/B

4.

II. Procurement Strategy Development
Strategy overview
1.
Please describe your procurement strategy and how it relates to the overall
business goals/objectives of your business unit/division and to those of your company. We
are primarily interested in overall mission, goals, strategies and targeted overall results and
how these strategies are linked to the company’s strategic and/or business plans
A.T. Kearney 7/17030/4/B

5.

II. Procurement Strategy Development
Strategy overview (cont’d.)
2.
Please check the box containing the description that best describes your
organization's procurement strategy
A.
B.
Strategy
development
and integration
with company
strategy and
goals
• No formal
• Procurement strategy • Procurement strategy • There is a formal,
strategy exists;
is developed and
is developed and
documented,
procurement
applied in response
applied at business
enterprisewide
strategy is not
to overall businessunit level and is
strategy focused
formally linked
unit/company goals
focused on
on the company’s
with business
and objectives;
optimizing the
value chain goals;
unit/company
procurement goals
business unit in the
specific
goals for
are indirectly
value chain;
quantitative goals
overall business
linked to businessspecific
are in existence
performance
unit/company goals
procurement goals
and their
for overall
are established that
attainment is
performance
have direct impact
critical to the
on achieving
overall business
company’s goals
success
• The strategic
• No formal strategic • The strategic mission
mission of the
mission for
of procurement • The strategic
Procurement
procurement
procurement has
has been developed
mission of
strategic mission
process is not
been developed, but
and preferred
procurement as a
including
formally
preferred sourcing
sourcing strategies
whole, as well as
purpose,
defined
strategies have been
have been
specific preferred
accountdeveloped for a few
developed for
sourcing strategies
abilities, overall
pilot purchasing
many purchasing
for most major
objectives and
categories
categories across
purchasing
purchasing
multiple business
categories, has
categoryunits
been developed
specific supply
and applied
objectives and
enterprisewide
strategies
A.T. Kearney 7/17030/5/B

6.

II. Procurement Strategy Development
Strategy overview (cont’d.)
3.
To what extent do the CEO (where applicable) and Senior Executive
Management provide active, full backing to the strategic mission of procurement? Please
describe how this support is provided
4.
Based on the response to the previous question, please check the box below
that best describes the level of CEO and Senior Executive Management backing, support
and commitment to the strategic mission of procurement
• Senior Level
• Senior Executive • Business
• Business
• CEO and Senior
Management’s
Management,
Unit/Divisional
Unit/Division
Executive
Support And
on a
heads provide
Management
Management
Commitment To
corporatewide
verbal support on a
actively supports
provide support in
Procurement’s
basis or at a
local level with
procurement
communicating
Mission
business unit
some corporate
excellence on a
strategic
level, is not
involvement
local level by
guidelines and
normally
establishing and
setting
involved
ensuring strategic
accountability via
directly with
guidelines are
policies and use of
procurement
followed
measures/rewards
A.T. Kearney 7/17030/6/B

7.

II. Procurement Strategy Development
Application of procurement methodologies
5.
Please complete the following table for each expenditure category
Major Category
Category
Spend(1)
(Millions)
1995
A.
B.
Materials
C.
D.
E.
Services
F.
G.
Capital
Expenditures
Other
H.
1996
Within the last two years the
majority of expenditures in this category have
undergone a thorough analysis of sourcing
Which
options and resulting strategies have been function/departme
developed and implemented
nt is responsible
for majority of
expenditure in
What % of annualized spend each category
Yes/No/NA
is covered?
Raw/
production material
resale
Goods for
Operating
supplies(2)
Packaging(3)
Nonoperating
supplies(4)
Operating(5)
Professional(6)
Administrative(7)
I.
Utilities
J.
Major
capital projects(8)
K.
Yearly
recurring capital
expenditures
L.
M.Spend
Total
Notes:
(1) Use U.S. dollars for multinational operations with purchases across borders; use local
currency for operations with purchases in one currency
(2) Materials used in the production process (MRO, etc.)
(3) All packaging materials
(4) Goods purchased not used in production (office supplies, printed materials, etc.)
(5) Transportation, facilities management, production work
(6) Accounting, legal, investment services, consulting, etc.
(7) Nonprofessional services including training
(8) Expenditures budgeted for separately as capital and may include both goods and
bundled services
A.T. Kearney 7/17030/7/B

8.

II. Procurement Strategy Development
Application of procurement methodologies (cont’d.)
6.
List below key Sourcing Groups(1) included in the categories answered “yes”
in question 5 above. What approaches have you implemented for these Sourcing Groups in
the last two years and how effective have they been in improving business performance?
Please quantify business impact in percent cost savings on total Sourcing Group spend.
Possible approaches could include one or more of the following six approaches to Strategic
Sourcing
Approach
Definition
Volume Concentration
• Increasing the total purchases from one or more suppliers to increase
negotiating leverage
Best Price Evaluation
• Using techniques such as price and cost benchmarking, cost unbundling,
competitive bidding and total cost analysis to evaluate and select suppliers
with the best prices
Global Sourcing
• Sourcing from the most competitive suppliers on a worldwide basis
Product Specification
Improvement
• Changing specifications for your purchases to improve the overall
cost/performance relationship of end products
Joint Process Improvement
• Working with suppliers to eliminate cost inefficiencies
Relationship Restructuring
• Establishing stronger relationships (e.g., alliances, joint ventures) with
suppliers to reduce overall purchase cost, support business expansion
Sourcing Group
Approach
Baseline Expenditure
($000s)
Percent Savings
Note: (1) Sourcing Groups are defined as groupings of purchased items that are likely to be sourced from the
same set of suppliers using the same approaches
A.T. Kearney 7/17030/8/B

9.

II. Procurement Strategy Development
Strategy development
7.
Does procurement actively review the operations to identify opportunities
for outsourcing/insourcing? Yes/No (Please circle one) If “yes,” please describe your
process.
8.
Based on the response to the previous question, please check the box below
containing the description that best fits your organization’s activities to identify outsourcing/
insourcing opportunities
Strategic Make
Versus Buy
• Procurement has
• A make-versus-buy • Procurement
• Procurement
little or no
process exists for
proactively
drives/leads the
involvement in
new products and
examines
strategic makemake-versus-buy
services
opportunities for
versus-buy
decisions
insourcing/outsour decision making
• There is a periodic
review of makecing
• No formal process
• Core competencies
exists to evaluate
versus-buy
are well-developed
make-versus- buy
decisions for
and drive
opportunities
existing
insourcing/outsour
products/services
cing efforts which
are supported by
in-depth makeversus-buy
analyses
A.T. Kearney 7/17030/9/B

10.

II. Procurement Strategy Development
Strategy development (cont’d.)
9.
To what degree are the following factors considered in the formulation of
procurement strategies for individual purchasing categories. (Please check the appropriate
box)
Factor
Not
Considered
Considered
Implicitly
Key Factors That
Considered
Drive The
Explicitly
But Do Not Drive Development Of
Procurement
The Development
Strategy
Of Procurement
Strategy
A.
Future purchasing environment
based on
1.
Supplier’s
growth/expansion plans
2.
Product or process
technology breakthroughs
3.
Political, environmental or
regulatory factors
4.
New-end product or
customer requirements
B.
Use of the entire supply chain in
formulating strategy
C.
Use of full life cycle costs of
materials and services
D.
Simplification and
standardization across product
lines and geographic locations
E.
Cost reduction based on all
A.T. Kearney 7/17030/10/B

11.

II. Procurement Strategy Development
Strategy elements
10.
Many firms are facing rapid changes in technology, market demands, and
other key external factors which shift customer requirements and impact market
competitiveness. How do you incorporate changes such as these in your procurement
strategic planning process?
11.
Similarly, supply markets are changing and new technologies emerging to
enable process improvements and/or cost reductions. Please describe formal programs
utilized to monitor technology shifts in your supply markets. What role does procurement
play in this process? What resources are applied to monitor the supply markets? Are these
resources dedicated on a full-time basis?
A.T. Kearney 7/17030/11/B

12.

II. Procurement Strategy Development
Strategy elements (cont’d.)
12.
Based on your response to the previous two questions, please check the box
below that best describes the procurement organization’s activity to stay abreast of
technological changes or other dynamics in the supply market
Supply Market
Monitoring
13.
• Procurement develops
• Procurement
• Procurement monitors
• Procurement
understanding of
selectively monitors supply market to
continually
the supply market
market for a few
anticipate change
monitors the supply
primarily through
purchasing
for several
market to anticipate
contacts made via a categories to track
purchasing
changes or other
competitive bidding price and capacity
categories for
dynamics that
process
trends to meet
future product
impact the supply
• Focus is at the local
current product
innovations
market for most key
level
needs
purchasing
• Supply market
monitoring is
categories
• Focus is at the local
level
across multiple • Enterprisewide
business units
procurement
viewpoint
Describe the role of the procurement organization in the new product
development
process
A.T. Kearney 7/17030/12/B

13.

II. Procurement Strategy Development
Strategy elements (cont’d.)
14.
What role do the following play in the new product development process?
(Please check the appropriate box)
Category
No Role In The Pilot Programs For Typical For Most New Major Feature Of All
New Product
Some New Product Product Develoment
New Product
Development Development Efforts
Efforts
Development Efforts
Effort
New Product
Development
Process
A.
B.
C.
Procurement plays a
participating role in
the early stages of
the new product
development process
The appropriate
internal functions
and external
suppliers are
involved in the early
stages of the new
product
development process
Procurement drives
the implementation
of
specification/product
sim-plification, standardization and
value engineering
approaches
A.T. Kearney 7/17030/13/B

14.

II. Procurement Strategy Development
Strategy elements (cont’d.)
15.
Describe the role of the procurement organization in the development and
management of external relationships (e.g., joint ventures, marketing
alliances)
16.
Has the procurement organization led the establishment of major strategic
relationships with key suppliers? Yes/No (Please circle one). If yes, please describe nature
of the most significant of these relationships
Supply Category
Nature Of Relationship
A.T. Kearney 7/17030/14/B

15.

II. Procurement Strategy Development
Strategy elements (cont’d.)
17.
What role does procurement play in the following processes? (Please check
the appropriate box)
Category
Procurement Procurement Plays A
Plays No Role In Support Role And
The Process
Has No DecisionMaking Authority
Procurement Is A
Participant In The
Process, And Has
Limited DecisionMaking Authority
Procurement
Takes On A
Leading Role
External
Relationships
A.
B.
C.
Structuring
supplier
relationships
Structuring
joint-venture
relationships and
marketing alliances
Providing strategic
input into customer
and competitor
relationships
A.T. Kearney 7/17030/15/B

16.

III. Procurement Organization
Organization overview
1.
Please describe your procurement department’s organizational structure and
reporting relationships (enclose organizational charts)
2.
Has the procurement organization changed substantially in the last two years?
Yes/No (please circle one). If yes, please describe any changes. Do you anticipate any
changes in the future? Yes/No (please circle one). If yes, please describe
A.T. Kearney 7/17030/16/B

17.

III. Procurement Organization
Decision making
3. Please describe procurement’s major decision-making responsibilities within the
organization. Which decisions are led by procurement?
4.
Please check the box containing the description that best describes your
procurement organization
Procurement
Organization
A. Corporate
Level
B. Business Unit/
Division Level
• Top procurement • Top level
• Top procurement • A global
management
procurement
management
procurement
generally reports
management is a
reports to a
officer, with
to a functional or
corporate staff
member of the top
overall
geographic
position with
executive-level
responsibility for
organization
limited decisioncouncil. Position
purchasing
making authority
carries significant
policies, practices
decision-making
and infrastructure
authority
is a member of
the top-level
executive council
• Procurement
• Procurement
function is locally
function is
based (plant
centrally based at
level) and reports
the business unit/
to a materials and/
division level and
or operations
reports to a
manager
functional staff
manager
• Procurement
• Central procurement
function is
centrally based
manager, serves
and reports to a
as member of the
member of
business
business
unit/division
unit/division
senior
senior
management
management
team, with
team. Position
responsibility for
carries significant
purchasing
decision-making
policies, practices
authority
and infrastructure
A.T. Kearney 7/17030/17/B

18.

III. Procurement Organization
Decision making (cont’d.)
5.
Please indicate which level in your organization makes decisions about the
following procurement-related activities. (Please check the appropriate box.)
Activity
For Major Key Categories
Ad Hoc,
Locally
Limited
CrossDecided (By
Informal
Local Entity, Coordination Function,
Cross-Unit
Individual,
Across
Teams
Function, Etc.)
Functions
A.
Product Development
B.
Product Specification
C.
Supplier Identification
D.
Supplier Selection
E.
Supplier Negotiation
Strategies
F.
Contract Provisions
G.
Supplier Management
H.
1.
Quality
2.
Service
3.
Delivery
Decision
Making Led
By
Procurement
Center*
Feedback To Suppliers
Note: * Procurement center is defined as a formal, standing, cross-functional organization/team with overall
responsibility for supply strategy, tactics and supplier relationships in a defined area of purchasing
expertise (material or service acquisition). It may be a part of the corporate procurement organization
may reside at a lead-business unit or lead-country procurement organization
or
A.T. Kearney 7/17030/18/B

19.

III. Procurement Organization
Training
6.
Please describe company initiatives utilized in managing and developing
procurement human resources and training/continuing education programs. Also, describe
efforts to train non-procurement professionals involved in procurement activities
7.
Based on your response to the previous question, please check the boxes
below that best describe your company’s practices
A.
• Procurement
• Procurement
• Procurement
• Procurement is
personnel are
contains some
personnel are
staffed by
Procure-ment
normally hired
category experts,
category experts
professionals with
Human
into purchasing,
people from
and some pursue
a mix of technical
Resources/Co
trained in
operations,
advanced degrees
and business
ntinuing
purchasing and
engineering or
or rotations across
backgrounds with
Education
generally remain
other functional
other functions
bachelor’s and
there during their
areas
advanced degrees
careers
• Training programs • Training programs • An established
• A formal, systematic
for procurement
are established at
training program
development/train
are on an asthe local
is in place for
ing program is in
B.
needed basis; no
purchasing level
most personnel
place for all
formal continuing
and utilize
involved in
personnel
Procure-ment
education
publicly available
purchasing; a
involved in
Training
programs exist
seminars and
combination of inpurchasing
training courses
house and public
enterprisewide.
training vehicles is
Advancement and
utilized. Training
compensation are
is standardized
based on
with limited
demonstrated
control and
capability in
coordination
established areas
required
of skill
A.T. Kearney 7/17030/19/B

20.

III. Procurement Organization
Training (cont’d.)
8.
Which of the following formal internal
training programs do you use?
A.
analyses
B.
time
C.
management
D.
➡
➡
➡
➡
➡
➡
➡
Supplier management
I.
Contract management
J.
Cost/price analysis
K.
Procurement procedures L.
➡
➡
Statistical
➡
➡
Just-in➡
➡
Quality
➡
Supplier
quality standards
E.
F.
Procurement
function
Negotiation
skills
9.
Procurement law M.
Supply market analysis
Company culture
N.
G.
Procurement ethics
O.
Personal
Please describe how you use both external
computer
skillssources (other parts of the company) to recruit procurement staff.
sources
and internal
H.
Other recruit
(specify)
Describe
procurement recruitment efforts and typical
profile (e.g., background, skill
___________________________________________
sets, etc.)
________________________________________________________
________________________________________________________
A.T. Kearney 7/17030/20/B

21.

III. Procurement Organization
Procurement function (cont’d)
10. Are the procurement staff experienced primarily in procurement or do they represent a
cross-fertilized experience with background in multiple disciplines (e.g., engineering,
marketing, finance, operations, etc.) (Please rate staff on the following scale)
Procurement Experts
1
Cross-Fertilized
2
3
4
11. Does the procurement function work within cross-functional teams, or as a “stand-alone”
organization? (Please rate procurement function on the following scale)
Stand-Alone
1
Cross-Functional Teams
2
3
4
A.T. Kearney 7/17030/21/B

22.

IV. Sourcing Process
Supplier selection
1.
2.
What processes do you use to identify potential suppliers?
Do you follow an established process for supplier qualification and selection? Yes/No
(Please circle one). If yes, please describe the qualification criteria. If possible, please
attach supplier qualification, certification and selection documents
A.T. Kearney 7/17030/22/B

23.

IV. Sourcing Process
Supplier selection (cont’d.)
3.
What process is utilized in selecting a sourcing approach for a particular purchasing
category? Is the process formalized/documented? Yes/No (Please circle one). How is the
sourcing approach customized to incorporate specific requirements of the different
purchasing categories?
4.
What roles do purchasing’s internal “customers” (i.e., materials, operations/production,
quality control, engineering, maintenance) play in the selection/implementation of the
sourcing approach for specific categories of materials and services?
A.T. Kearney 7/17030/23/B

24.

IV. Sourcing Process
Sourcing process characteristics
5.
To what extent are the following characteristics found in the sourcing process? (Please
check the appropriate box)
Characteristics
A.
Overall sourcing
approach is specific to a
purchasing category and is adapted
to its requirements
B.
Developed and emerging
supply markets are explored
C.
A variety of formal
approaches based on measurable
criteria are used to screen suppliers
D.
Disciplined, structured,
fact-based, formal sourcing
process is utilized
E.
Suppliers with long-term
structural advantages (i.e., lowest
long-term total cost) are the focal
point of the sourcing process
F.
Purchasing
customers/end-users are heavily
involved in seeking, evaluating
and transitioning to new suppliers
Typically Not
Applied
Pilot Programs Applied Across
Applied
For Some Key
Many Key
Enterprisewide
Purchasing
Purchasing
For All Key
Categories
Categories At
Purchasing
Most Business
Categories
Units
Comments (Optional):
A.T. Kearney 7/17030/24/B

25.

IV. Sourcing Process
Product/specifications review
6.
Is there a formal process for specifications and requirements review (e.g., value analysis)?
Yes/No (Please circle one). If yes, please describe the review process
7.
Based on your response to the previous question, please check the box below that best
describes the process for establishing specifications for materials, products and services
Materials, Products
• Specifications
• Category
• Specifications and • Procurement works
And Service
provided by
specifications are
requirements are
directly with
Specifications
engineering and/or
challenged on a
challenged by
product
Development
end-users are
case-by-case
procurement or
engineers/end-users
accepted at face
basis
suppliers at
to define
value without
multiple business
specifications of
being challenged
units for critical
current and new
by procurement
categories
products
• Procurement is
• Suppliers work
involved with
directly with endengineering/endusers to define
users on an ad hoc
specifications and
basis in the
requirements for
development of
key purchasing
specifications/requi
categories
rements
enterprisewide
A.T. Kearney 7/17030/25/B

26.

V. Supplier Management/Development
Supplier management overview
1.
To what extent are the following characteristics found throughout your organization?
(Please check the appropriate box)
Characteristics
A.
Resource investment
(people, capital) into the supply
base with long-term
development in mind
B.
Value-added
relationships (based on
formalized frameworks) with
key suppliers are managed over
time through benchmarking
and open communication
C.
Suppliers’ core
competencies are identified and
tools/programs (loans, credits,
etc.) are created to enhance
their ability to serve you in new
geographic areas, new
materials and new products
D
Suppliers are
integrated into the business
process through their active
involvement in day-to-day
activities
E.
Regular formal
feedback of supplier
performance, with adaptations
of relationships to meet
situational needs (e.g., openbook policies on cost, joint goal
setting, information sharing,
etc.)
Typically Not
Applied
Pilot Programs
For Some Key
Purchasing
Categories
Applied Across
Most Key
Purchasing
Categories At
Most Business
Units
Applied
Enterprisewide
For All Key
Purchasing
Categories
Comments (Optional):
A.T. Kearney 7/17030/26/B

27.

V. Supplier Management/Development
Two-way learning/enhancing supplier performance
2.
Which of the following do you engage in with your suppliers on a regular basis? (Please
check the appropriate box)
Used With A
Few Key
Suppliers On
Pilot Basis
Not Used
A.
Cross-company meetings,
workshops, feedback sessions
B.
Utilization of supplier knowhow to improve purchasing practices
C.
Incentive programs with
suppliers
D.
Joint value-added programs for
first and second tier suppliers
Used With
Many Key
Suppliers
Used With All
Key Suppliers
Please describe the working relationship with key suppliers
A.T. Kearney 7/17030/27/B

28.

V. Supplier Management/Development
Supplier development
3.
Do you use any of the following criteria to certify your suppliers’ quality processes?
(Please check the appropriate box)
Used With A
Few Key
Suppliers On
Pilot Basis
Not Used
A.
ISO 9000 Series
B.
Balridge Criteria
C.
Deming Criteria
D.
Internally Developed
Used With
Many Key
Suppliers
Used With All
Key Suppliers
Criteria
E.
Other Criteria (Please
Specify)
Please explain the certification process(es) used
A.T. Kearney 7/17030/28/B

29.

V. Supplier Management/Development
Risk sharing
4.
Do you share business risks in any of the following ways with your suppliers on a
regular basis? (Please check the appropriate box)
Used With A
Few Key
Suppliers On
Pilot Basis
Not Used
A.
B.
C.
Used With
Many Key
Suppliers
Used With All
Key Suppliers
Development costs
Market development costs
Obsolescence costs (unsaleable
product)
D.
Loan guarantees
Please describe risk sharing undertaken with key suppliers
A.T. Kearney 7/17030/29/B

30.

V. Supplier Management/Development
Risk sharing (cont’d.)
5.
In which of the following ways do you invest in your suppliers? (Please check the
appropriate box)
Used With A
Few Key
Suppliers On
Pilot Basis
Not Used
Used With
Many Key
Suppliers
Used With All
Key Suppliers
A.
B.
C.
Short-term loans
Long-term loans
Purchase production equipment
and tooling
D.
Equity investment
E.
Ownership of controlling
interest
Please describe investment activities with key suppliers
A.T. Kearney 7/17030/30/B

31.

VI. Day-To-Day Purchasing/Controlling
Process overview
1.
How have you reduced the number of steps and/or costs in your day-to-day procurement
activities? What role does technology play in the process?
2.
What additional activities do you currently have planned for further reducing the
steps/costs of your day-to-day procurement activities?
A.T. Kearney 7/17030/31/B

32.

VI. Day-To-Day Purchasing/Controlling
Process simplification and improvement
3.
To what extent are each of the following practices applied in your organization?
(Please check the appropriate box)
Characteristics
A.
Suppliers have full access
to company order and stock
information (e.g., virtual shelf,
vendor managed replenishment)
B.
Continuous process
simplification is sought for all
procurement activities:
1.
Transactionoriented work is
outsourced
2.
Pre-established
agreements in place (e.g.,
electronic supplier
catalogs, on-line access to
agreements)
3.
Express buy
systems in place (e.g.,
direct computer linkages
bypass procurement
activities)
4.
Procurement/
credit card payments
reduce transactional costs
Typically Not
Applied
Pilot Programs Applied Across
Applied
For Some HighMost HighEnterprisewide
Volume, Low- Volume, LowFor All HighValue Purchasing
Value
Volume, LowCategories
Purchasing Value Purchasing
Categories At
Categories
Most Business
Units
Comments (Optional):
A.T. Kearney 7/17030/32/B

33.

VI. Day-To-Day Purchasing/Controlling
Process simplification and improvement (cont’d.)
4.
To what extent has information technology been used to streamline procurement
processes? (Please circle the number that applies)
Characteristics
Not At All
To A Great Extent
A.
Repetitive
activities are automated
0
1
2
3
B.
Paperwork is
eliminated
0
1
2
3
C.
Procurement cycle
times and costs are
dramatically reduced
0
1
2
3
D.
Both buyer and
end-user are provided
decision-making tools to
improve productivity
0
1
2
3
E.
Requisitions are
created, routed and
approved on-line
0
1
2
3
Comments (Optional)
A.T. Kearney 7/17030/33/B

34.

VII. Performance Management
Internal performance
1.
2.
Describe your internal performance measurement system. Please enclose sample
performance reports
Describe the internal feedback and continuous improvement process
Supplier performance
3.
How do you measure supplier performance? Please provide a sample supplier performance
report
A.T. Kearney 7/17030/34/B

35.

VII. Performance Management
Performance management systems
4.
To what extent are the following characteristics found throughout your organization?
(Please check the appropriate box)
Characteristics
A.
Formal measurement
systems are used to track and
improve performance of the
overall procurement process
B.
Performance and cost
objectives are based on:
1.
End-product target
pricing
2.
External
benchmarking of
marketplace price trends
3.
Customer
satisfaction
4.
Purchase category
market conditions
5.
Company buying
power
C.
Procurement personnel
are evaluated and rewarded based
on team or individual
performance
D.
General management is
measured upon the success of
implementing corporate
procurement initiatives
E.
Formal supplier
feedback/continuous
improvement programs are in
place
F.
Formal measurement
systems are used to track and
improve performance of the
supply base
G.
Performance
Typically Not
Applied
Pilot Programs Applied Across
Applied
For Some Key
Most Key
Enterprisewide
Purchasing
Purchasing
For All Key
Categories
Categories At
Purchasing
Most Business
Categories
Units
A.T. Kearney 7/17030/35/B

36.

VII. Performance Management
Goal setting
5.
To what extent are the following business goals used in the performance measurement of
procurement management? (Please circle the number that best describes the performance
measurement criteria)
Corporate Goals Impacted By Procurement
A.
Reduction in purchasing price of all
external purchases
B.
Reduction in total cost of all external
purchases
C.
Reduction in lead times
D.
Reduction in customer order cycle time
E.
Improvement in purchased goods/service
quality
F.
G.
Improvement in end-product quality
Attainment of target costs for key
purchased goods/services
H.
Reduction in raw materials/components
inventory
I.
Used
As A Measure
Of
Not
At All
To A Great
Procurement Performance?
Extent
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
Reduction in new product development
cycle time
A.T. Kearney 7/17030/36/B

37.

VIII. Information Management
Procurement strategy enablers
1.
To what extent do information systems enable procurement strategies (i.e.,
lowered cost, increased efficiency) to work? (Please circle the number that applies)
Characteristics
A.
Information technology systems
are used by the procurement staff to
perform and facilitate value-added
analysis to support the development of
specific and overall procurement
strategies
B.
Supplier metrics/trends
immediately available, automatically
captured and correlated against relevant
market and internal company
performance data to support continuous
improvement
C.
Information systems speed up and
simplify routine transactions and lower
costs
D.
Information systems allow for
global control and integration in a
standardized way
E.
Information systems allow end
users to smooth operational procedures
and optimize cycle time and accuracy
F.
Information technology is used to
help shape the procurement strategy:
—Expanding visibility of supply
markets
—Enabling integration across the
supply chain
Comments (Optional):
Not At All
To A Great Extent
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
A.T. Kearney 7/17030/37/B

38.

VIII. Information Management
Systems capability
2.
To what extent do information systems integrate data across the supply chain? (Please
circle the number that applies)
Characteristics
A.
Electronic commerce techniques in place
(e.g., electronic ordering, order status, and
payment; electronic linkages for planning;
electronic catalogues; express-buy systems)
to make procurement more efficient
B.
Numerous tiers in the supply chain are
integrated
C.
D.
Systems link material requirements
planning (MRP) systems with suppliers and
automate the interface between customers
and suppliers enabling EDI to work —
paperless operations for order placement,
planning, scheduling and order tracking and
CAD/CAM links for simultaneous product
development, if applicable
Electronic routing of requisitions to
supplier or buyer for purchase order
processing
Not At All
To A Great Extent
0
1
2
3
0
1
2
3
0
1
2
3
0
1
2
3
Comments (Optional):
A.T. Kearney 7/17030/38/B

39.

VIII. Information Management
Information/data accessibility
3.
To what extent is information available when and where it is needed to create value?
(Please circle the number that applies)
Characteristics
Not At All
To A Great Extent
A.
Procurement data widely accessible across
the procurement function on a real-time basis
0
1
2
3
B.
Procurement data widely accessible across
other functions
0
1
2
3
C.
Easy exchange of information with your
major suppliers
0
1
2
3
0
1
2
3
D.
Customer information shared with suppliers
E.
Purchases categorized with common
commodity and supplier codes
0
1
2
3
F.
Data access and reporting is flexible to meet 0
needs
1
2
3
1
2
3
G.
Supplier order status readily available
0
Comments (Optional):
A.T. Kearney 7/17030/39/B

40.

IX. Additional Information
Success stories
1.
We would like to hear about three of the successes you feel most proud of. These
successes could be the result of a one-time effort, or a long-term process. They could be
about your organization, strategy development or about sourcing a product. Please describe
the situation, critical issues, solution and end result
Success #1
Success #2
Success #3
A.T. Kearney 7/17030/40/B

41.

IX. Additional Information
Cost reduction opportunities
2.
Please identify the two or three most significant opportunity areas where the procurement
organization should be focused for cost reduction
A.T. Kearney 7/17030/41/B

42.

X. Appendix A — Reference To Leadership Practices In
Procurement
Closed-ended questions — check off box
Questionnaire Reference
Procurement Strategy
Procurement Organization
Sourcing Process
Leadership Practice
2A
Procurement Strategy #1
2B, 4
Procurement Strategy #2
5, 6
Procurement Strategy #3
8, 9
Procurement Strategy #4
12, 14
Procurement Strategy #5
17
Procurement Strategy #6
5
Procurement Organization #1
4
Procurement Organization #2
7A, 7B
Procurement Organization #3
10, 11
Procurement Organization #4
7B, 8
Procurement Organization #5
5C, 5E
Sourcing Process #1
5B, 5D
Sourcing Process #2
5A, 7
Sourcing Process #3
5F
Sourcing Process #4
A.T. Kearney 7/17030/42/B

43.

X. Appendix A — Reference To Leadership Practices In
Procurement (cont’d.)
Closed-ended questions — check off box
Questionnaire Reference
Supplier Management
Day-To-Day Purchasing/
Controlling
Performance Management
Information Management
Leadership Practice
1A
Supplier Management #1
1B
Supplier Management #2
1C
Supplier Management #3
1D
Supplier Management #4
1E
Supplier Management #5, 6
2, 3
Supplier Management #7
4, 5
Supplier Management #8
3
Day-To-Day #1
4
Day-To-Day #2
4B
Performance Management #1
4A
Performance Management #2
4F, 4G
Performance Management #3
4C, 4E
Performance Management #4
4D, 5
Performance Management #5
1
Information Management #1
2
Information Management #2
3
Information Management #3
1B, 1F
Information Management #4
A.T. Kearney 7/17030/43/B

44.

X. Appendix B — Reference To Leadership Practices In
Procurement
Open-ended questions — supporting information
Questionnaire Reference
Procurement Strategy
Procurement Organization
Leadership Practice
1
Procurement Strategy #1
7
Procurement Strategy #1, 4
3
Procurement Strategy #2
Performance Management #5
15
Procurement Strategy #6
13, 15, 16
Procurement Strategy #5
10, 11
Procurement Strategy #6
3
Procurement Organization #2
6
Procurement Organization #3, 5
9
Procurement Organization #4
1, 2
Procurement Organization #5
Performance Management #4
A.T. Kearney 7/17030/44/B

45.

X. Appendix B — Reference To Leadership Practices In
Procurement (Cont’d)
Open-ended questions — supporting information
Questionnaire Reference
Sourcing Process
Day-To-Day Purchasing And
Controlling
Performance Management
Leadership Practice
1, 2
Sourcing Process #1, 2
3
Sourcing Process #2, 3
6
Sourcing Process #3
4
Sourcing Process #4
1, 2
Day-To-Day #1, 2
1
Performance Management #1, 2, 3, 4
3
Performance Management #3
2
Performance Management #4
A.T. Kearney 7/17030/45/B

46.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Calculations
(Scale 0-3)
Procurement Strategy
•Score on Section II, Question #2A
#1
Score = (#2A)
Procurement Strategy
•Average of scores on Section II, Questions #2B and #4
#2
[(#2B) + (#4)]
Score =
2
Procurement Strategy
•Section II, Question #5
#3
—Percent categories answered “yes” = A =
Range of A: 0% 1%-33% 33%-66% 67%-100%
Score = B
0
1
2
3
•Section II, Question #6
Number Of
Sourcing Groups
0
1-3
4-6
Score = C
0
1
2
•Leadership practice
Score = (0.4) B + [(0.6) (Avg. (C))] (A)
7-8
3
Procurement Strategy
•Average of Section II, Questions #8 and #9
#4
[(#8) + (Avg. (#9A)) + (#9B) + (#9C)
+ (#9D) + (#9E) + (#9F) + (#9G) + (#9H)]
Avg.Score
(#9A)= =
9
[(#9A1) + (#9A2) + (#9A3)
+ (#9A4)]
4
A.T. Kearney 7/17030/46/B

47.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Calculations
(Scale 0-3)
Procurement Strategy
•Average of Section II, Questions #12 and #14
#5
Score = [(#12) + (#14A) + (#14B) + (#14C)]
4
Procurement Strategy
•Average of Section II, Question #17
#6
Score = [(#17A) + (#17B) + (#17C)]
3
Procurement
•Average of Section III, Question #5
Organization #1
Score =
[ (#5A) + (#5B) + (#5C) + (#5D) + (#5E) +
(#5F) + (Avg. (#5G)) + (#5H)]
8
Avg. (#5G) =
Procurement
Organization #2
[ (#5G1) + (#5G2) + (#5G3)]
3
#4
•Average of Section III, Question
Score = [ (#4A) + (#4B)]
Procurement
Organization #3
Procurement
Organization #4
2
•Average of Section III, Question #7
Score = [ (#7A) + (#7B)]
•Average of Section 2III, Questions #10 and #11
Score = [{(#10) – 1} + {(#11) – 1}]
2
A.T. Kearney 7/17030/47/B

48.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Procurement
Organization #5
Calculations
(Scale 0-3)
•Average of Section III, Questions #7B and #8
Score =
[(#7B) + (#8)]
2
•Question #8
Number Of Training
Programs Checked
Score (#8)
Sourcing Process
#1
Sourcing Process
#2
Sourcing Process
#3
Sourcing Process
#4
0-1
2-4
5-7
8-14
0
1
2
3
•Average of Section IV, Questions #5C and #5E
Score = [(#5C) + (#5E)]
•Average of Section IV,2 Questions #5B and #5D
[(#5B) + (#5D)]
Score
of =
Section IV,2 Questions #5A and #7
•Average
Score = [(#5A) + (#7)]
•Score on Section IV,2Question #5F
Score = (#5F)
A.T. Kearney 7/17030/48/B

49.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Calculations
(Scale 0-3)
Supplier
Management/
Development #1
•Score on Section V, Question #1A
Score = (#1A)
Supplier
Management/
Development #2
•Score on Section V, Question #1B
Score = (#1B)
Supplier
Management/
Development #3
•Score on Section V, Question #1C
Score = (#1C)
Supplier
Management/
Development #4
•Score on Section V, Question #1D
Score = (#1D)
Supplier
•Score on Section V, Question #1E
Management/Devel Score = (#1E)
opment #5 And #6
A.T. Kearney 7/17030/49/B

50.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Calculations
(Scale 0-3)
Supplier Management/
•Average of Section V, Questions #2 and #3
Development #7
[Avg. (#2) + Max. (#3)]
Score =
2
Avg. (#2) =
[(#2A) + (#2B) + (#2C) + (#2D)]
4
Max. (#3) =
Max. [(#3A) or (#3B) or (#3C) or (#3D)]
Supplier Management/
Development #8
•Average of Section V, Questions #4 and #5
Score =
Avg. (#4) =
Avg. (#5) =
[Avg. (#4) + Avg. (#5)]
2
[(#4A) + (#4B) + (#4C) + (#4D)]
4
[(#5A) + (#5B) + (#5C) + (#5D) + (#5E)]
5
A.T. Kearney 7/17030/50/B

51.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Calculations
(Scale 0-3)
Day-To-Day
•Average of Section VI, Question #3
Purchasing/Controllin
[(#3A) + (#3B1) + (#3B2) + (#3B3) + (#3B4)]
Score =
g #1
5
Day-To-Day
•Average of Section VI, Question #4
Purchasing/Controllin
g #2
[(#4A) + (#4B) + (#4C) + (#4D) + (#4E)]
Score =
5
Performance
Management #1
Performance
Management #2
•Average of Section VII, Question #4B
[(#4B1) + (#4B2) + (#4B3)
+ (#4B4) + (#4B5)]
5
Score =
•Score on Section VII, Question #4A
Score = (#4A)
Performance
Management #3
•Average of Section VII, Questions #4F and #4G
Performance
Management #4
[(#4F) + (#4G)]
Score of
= Section
VII, Questions #4C and #4E
•Average
2
Score = [(#4C) + (#4E)]
2
A.T. Kearney 7/17030/51/B

52.

X. Appendix C — Scoring Methodology
All “check-off box” questions are scored on 0-1-2-3 scale with left-most
column a “0” and right-most column “3”
Leadership
Practice
Performance
Management #5
Calculations
(Scale 0-3)
•Score on Section VII, Question #4D and #5
Score =
Information
Management #1
•Average of Section VIII, Question #1
Score =
Information
Management #2
Information
Management #4
[(#1A) + (#1B) + (#1C) +
(#1D) + (#1E) + (#1F)]
6
•Average of Section VIII, Question #2
Score =
Information
Management #3
[(#4D) + (#5A) + (#5B) + (#5C)
+ (#5D) + (#5E) + (#5F) + (#5G)
+ (#5H) + (#5I)]
10
[(#2A) + (#2B) + (#2C) + (#2D)]
4
•Average of Section VIII, Question #3
[(#3A) + (#3B) + (#3C) + (#3D) +
(#3E) + (#3F) + (#3G)]
Score =
7
#1B and #1F
•Average of Section VIII, Questions
Score =
[(#1B) + (#1F)]
2
A.T. Kearney 7/17030/52/B