Developing an Advanced Competence in Purchasing & Supply

Developing an Advanced Competence in
Purchasing & Supply

Jeremy Smith
(jsmith@iiaps.org)

Director, Corporate Services

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

© IIAPS 2010 All Rights Reserved IIAPS Confidential 1

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 at a Glance

The mission of IIAPS is to raise standards
IIAPS Mission 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
IIAPS Focus establishment of advanced international
standards for purchasing and supply chain
professionals worldwide… The Institute's
International Black Belt in Advanced
Purchasing & Supply


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 Corporate Relationships

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 Service Offers

IIAPS Benchmarking &
IIAPS Belt Qualification
Corporate Accreditation

Key characteristics: Key characteristics:
1) Approach: a 3-step approach 1) PSCM Index:
(Green – Red – Black Belt). Benchmarking of current performance
All three steps have to be gone against world-class standards in 184
attributes! Result: positioning &
2) Content: 8-step sourcing process,
transformation report
broken down in 31 learning modules
3) Learning style: online learning plus
2) ICA Index:
completion of 4 project reports for each
Benchmarking tool to understand individual
belt (Green and Red Belt – 2.000
competence gaps
words/thesis)
and training needs
4) Investment: 2.000 USD/belt


IIAPS Belt Qualifications


IIAPS Stages of Qualification
From Green to Black Belt

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 … awarded after
… awarded after satisfactory
completion of 4 additional satisfactory completion of
completion of the 4 Project
Project Reports required as the final comprehensive
Reports required as part of
part of the training for the examination covering all
the training for the single
multiple project/new aspects of the course of
category management
product and complex study, and the completion of
case study in the …
category management a final company related
learning environment.
case study Dissertation.


Qualification Focus
8 Step Sourcing Process

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 Focus
More than 30 Theory and Practice Modules

Principles of Category Management & Strategic Purchasing and Sourcing Portfolio Analysis
Sourcing Techniques
Segmentation Analysis Strategic Source Planning Methodologies
Spend Criticality Analysis Selecting Make-Buy & Strategic Sourcing Options
Strategy Team Selection Techniques Managing Barriers to Sourcing Strategy
Stakeholder Management Techniques Implementation

Developing the Business Case for Strategic Sourcing Selecting Tactical & Contractual Levers

Defining Business Needs, Value Propositions & KPIs Selecting Market Testing Options

Understanding Internal Demand Management Levers Pre-Qualifying & Selecting Suppliers for Market
Testing
Understanding Supply Market and Supply Chain
Levers Developing the Business Case for Market Testing

Request for Information (RFIs) Methodologies Managing the Bidding & Market Test Process

Purchase Price Cost Analysis (PPCA) Methodologies Managing the Negotiation Process

Commercial Leverage Methodologies Developing the Business Case for Contract Award

Competitive Forces Analysis Contract Start-up & Supplier Performance
Management
Power Positioning Analysis
Sourcing Strategy Review & Learning Techniques
Supplier Positioning Analysis
Supplier Relationship Management Techniques
Buyer & Supplier Performance Alignment Techniques
Risk, Opportunity & Knowledge Management


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


Learning Methods
20% Video Teaching and 80% Self Learning

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!

Theory Videos Praxis Video Modules Case Studies for Assessment


Project Reports for Belt Qualification
Four Reports to be Assessed

Each candidate has to complete 4 Project Reports (of a minimum of
2000 words each) for assessment for each case study being analysed
in 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 Sourcing Strategy Business Case

2nd report Market Testing Business Case

3rd report Contract Award Business Case

Strategy Review & Lessons
4th report Learned Report


Further Benefits
Membership Status of Belt Holders

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

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

SIIAPS: Student Membership of the IIAPS

AIIAPS: Associate Membership of the IIAPS

MIIAPS: Full Membership of the IIAPS


IIAPS Benchmarking &
Corporate Accreditation


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


Benchmarking Organisational Competence The analysis can be reported at varying
The PSCM Index Reports levels:
Within Company
Within Market Segment
The output of The PSCM Index presents the user with a Against Similar Companies
self-assessment benchmark report. Across Entire Database

Summary Report To facilitate this you can obtain detailed
and summary reports filtered by
variables including:
Industrial Sector
Turnover
Geographical Focus
Number of Employees
Organisational or Procurement Spend
Ownership Structure

The analysis is provided in chart and
tabular form:


The PSCM Index Detailed Reports
Score by Section 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.
PSCM Index Total Score Report


Key: 88.5
Maximum Score 53.1
The PSCM Index – Self Assessment Sector Scores
Average Score

Sector
Minimum Score

WORLD CLASS 100%
94.5 93.9 94.5 Upper Tier
90.7

Top Class
88.5 91%
87.7
Middle Tier

79.7 83%

76.5 75.4 Lower Tier
73.2 73.6
72.8 71.2 71.5 72.6 71.1 75%
68.4 68.5 Tier
Upper

Upper Class
64.3 66%
60.4 60.4 62.2 63.5 61.8 63.9
59.1 58.7 Middle Tier
57.9 58.2 58.2
55.0 56.4 58%
55.6 55.6
53.4 54.7 Lower Tier
52.1 51.7
49.8 49.9
48.6
46.4
49.2 49.1 50%
45.7 44.4 Upper Tier

Lower Class
41%
Banks/Finance/Insurance

Industrial Manufacturing
Consumer Goods/FMCG

Middle Tier
Distribution/Logistics

33%

Public - International
Aerospace/Defence

Lower Tier
Leisure Industries

Media/Publishing

Public - Regional
25%

Pharmaceuticals

Public - National

Utilities/Energy
Public - Quasi
Metals/Mining

Bottom Class
Construction

Upper Tier
IT/Telecoms
Food/Drinks
Automotive
All Sectors

16%
Chemicals

Transport
Oil & Gas

Middle Tier

Retail
8%

Lower Tier
0%


Key: 88.5
Maximum Score 53.1
The PSCM Index – IIAPS Audited Sector Scores
Average Score

Sector
Minimum Score

WORLD CLASS 100%
Upper Tier

Top Class
91%
Middle Tier
80.2 83%
79.3 80.2
76.4 Lower Tier

69.8 70.0 75%
69.1 68.5 Upper Tier
67.6

Upper Class
65.5 65.3
64.4 64.1 64.6 66%
63.4 62.3 63.9 62.4
61.1
59.4 Middle Tier
58.7
56.7 56.8 58%
55.2 54.7
54.1 54.1 51.2 Lower Tier
50.8 51.7 52.3 52.0 52.0
49.8 50.2 50.2 50.1
48.0 47.9 48.0 48.2 48.6
46.6 50%
Upper Tier

Lower Class
43.8
40.0 41%
Banks/Finance/Insurance

Industrial Manufacturing
Consumer Goods/FMCG

35.2 Middle Tier
Distribution/Logistics

33%

Public - International
Aerospace/Defence

Lower Tier
Leisure Industries

Media/Publishing

Public - Regional
25%

Pharmaceuticals

Public - National

Utilities/Energy
Public - Quasi
Metals/Mining

Bottom Class
Upper Tier
Construction

IT/Telecoms
Food/Drinks
Automotive
All Sectors

16%
Chemicals

Transport
Oil & Gas

Middle Tier

Retail
8%

Lower Tier
0%


The PSCM Index – IIAPS Audited Scores for a Client
Self- Current Class Top Score in Potential Best Top Score in
Variance Newpoint
Assessment Position Your Sector in Class for PSCM Index
(%) Audit (%)
(%) (Newpoint Audit) (%) Your Sector (%)

A: Business Buy-in and Role 74.0 -6.0 68.0 Upper Class / Upper Tier 78.0 89.0 95.0
B: Stakeholder Management 73.4 - 73.4 Upper Class / Upper Tier 73.4 90.6 81.3
C: Strategic Sourcing Process 63.3 -5.0 58.3 Upper Class / Lower Tier 69.6 91.5 75.5
C1: Strategic Understanding 75.0 -12.5 62.5 Upper Class / Middle Tier 69.6 95.5 70.5
C2: Defining Business Needs 67.7 -9.1 58.5 Upper Class / Lower Tier 62.2 86.6 74.4
C3: Supply Market Analysis 50.0 - 50.0 Upper Class / Lower Tier 71.7 89.5 74.3
C4: Sourcing Option Dev. & Selection 68.8 -6.3 62.5 Upper Class / Middle Tier 72.9 97.9 74.3
C5: Tender & Market Test 69.4 -3.7 65.7 Upper Class / Middle Tier 69.4 93.5 72.2
C6: Final Supp. Selection & Cont. Award 55.9 - 55.9 Upper Class / Lower Tier 72.1 98.0 85.3
C7: Contract Start-up & SPM 62.5 -3.6 58.9 Upper Class / Middle Tier 69.3 86.5 87.5
C8: Transition & Exit 41.7 - 41.7 Lower Class / Upper Tier 75.0 88.9 75.0
D: Organisational Structure 71.2 -1.9 69.3 Upper Class / Upper Tier 75.9 98.1 92.9
D1: Organisational Effectiveness 61.7 +1.7 63.3 Upper Class / Middle Tier 76.7 93.3 95.0
D2: Individual Competences 77.9 -4.8 73.1 Upper Class / Upper Tier 76.0 100.0 88.5
D3: Organisational Alignment 68.8 - 68.8 Upper Class / Upper Tier 93.8 100.0 97.0
E: Systems and Processes 56.8 - 56.8 Upper Class / Lower Tier 76.5 90.2 85.6
Upper Class /
Total 65.0 -4.0 61.0 Middle Tier 70.0 92.1 80.2

The PSCM Index – IIAPS Transformation Report
When undertaking an audited
Embed Functional Silo
analysis of the user’s self- Continuous Reorganisation
Improvement &
assessment IIAPS also KPI Culture
Internally
Embed Demand
Management
provides a detailed report on

Difficult
Competence
Diversity & Inclusion
Embed
Planning
recommendations for SPM/SRM
Codify Knowledge
Competence
improvement, as outlined in the

Ease of Implementation
Embed Supply User Buy-In /
Transformation Matrix opposite. Market Analysis Cross-
Competence Functionality /
Early Involvement
MIS Realignment
The matrix shows the following
segmentation of transformation Supplier Selection &
Category Mgmt
Segmentation Establish Sourcing
Contract Award Options
options: Improvements
User On-Line
Categorisation
Approach
Common
– High Value / Easy to Implement Sourcing
Process &
– High Value / Difficult to Implement Handbook
Easy

User and PSCM
– Low Value / Easy to Implement Tender & Market Test Proactive
Improvements Reactive Sourcing
Sourcing Training
– Low Value / Difficult to Implement Training
Transition & Exit
Make/Buy &
Improvements User & PSCM
Collaboration
Initial Orientation
IIAPS also provides costed Training
Review

options for supporting
Low High
transformation initiatives.
Potential Value Improvement

Benchmarking Individual Competence
The ICA Index 138 Attributes
Personal Profile & Experience
Your Current Experience 7 Questions
Other PSCM Experience 4 Questions
Other Non-PSCM Experience 4 Questions
Procurement Competencies
Strategic Understanding & Segmentation 9 Questions
Defining Business Needs & Demand Options 13 Questions
Supply Market Analysis & Assessment 19 Questions
Sourcing Option Development & Selection 14 Questions
Market Test 10 Questions
Negotiation & Contract Award 5 Questions
Performance Management 17 Questions
Relationship Transition & Exit 4 Questions
Logistics & Supply Chain Management 23 Questions
Individual Motivation
Morale & Energy 3 Questions
Performance & Potential 3 Questions
Training & Development 3 Questions

Benchmarking Against Role Profiles

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.

Typical Roles Focus of Attention

Shareholder value; investor relations; business vision, strategy and
C-level Board Director,
8 Executive CPO
direction; revenue, profit and earnings per share (EPS) growth and
corporate governance
Operational excellence and global delivery; risk management,
Senior Vice President /
7 innovation value and cost; management; visioning and selling the
non-board CPO
function Create your own Role
General Manager Procurement,
Profiles or Select the one
Shaping operational and functional strategies; implementing business
6 Regional Procurement Head / closest to your current role
decisions, leading teams and influencing senior stakeholders
Procurement Director
VP Strategic Sourcing / Portfolio management; flow down of strategy; building teams;
5 Category/Commodity Director managing resources; initiatives & stakeholders
Senior Procurement Manager
Major project and key supplier management; breakthrough value
4 Category / Commodity Manager
creation; outsourcing
Category / Commodity Specialist / Shaping sourcing strategies and source plans; analysing supply
3 Senior Buyer / Purchasing markets; supplier negotiation and development of strong local
Executive relationships
Tactical and operational purchasing; supply chain and post-contract
2 Buyer / Vendor Manager
supplier performance; support for colleagues and stakeholders
Cost Analyst Support for buying, supply chain, category and supplier teams; data
1 Buyer Planner gathering, analysis and transactional activities
Assistant / Junior Buyer


Individual Competence Assessment Reports
Reports are made at aa number of
Total Score Reports are made at number of
different levels:
different levels:
Against World-Class Standards

Against Best-in-Class Standards

Within Role

Within Company

Basic Advanced


Your Role Profile
Based on Standard
IIAPS Criteria

Your Results
Your Results
Role: Procurement Director
Role: Procurement Director
Required score boundaries: 55%-70%
Required score boundaries: 55%-70%
The Individual Competence Assessment (ICA) has awarded
The Individual Competence Assessment (ICA) has awarded
you 49%. This was above the average score (41%), but below
you 49%. This was above the average score (41%), but below
the target score profile for your role.
the target score profile for your role.
Analysis of your basic sourcing competencies shows that
Analysis of your basic sourcing competencies shows that
you are amongst the top performers in your organisation,
you are amongst the top performers in your organisation,
scoring 64%.
scoring 64%.
Analysis of your advanced sourcing competencies show that
Analysis of your advanced sourcing competencies show that
you are in the under-performing against other individuals,
you are in the under-performing against other individuals,
scoring only 28%.
scoring only 28%.
According to you role, your total score is below what is
According to you role, your total score is below what is
required, with particular attention needed on developing
required, with particular attention needed on developing
advanced sourcing competencies.
advanced sourcing competencies.


Total Score
Peter Smith – Buyer
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

Basic Advanced


Corporate Overview Reports and Competence Gaps
The Skills and Competence Gap Analysis
The Team Overview Report allows the user to compare their overall, basic and advanced Report shows the gaps between the user’s
ICA scores with other individuals in the organisation. current skills and experience in PSCM and
defined world-class and best-in-class
The comparison can be made against a number of pre-defined characteristics (e.g. PSCM competence standards.
role, business function, business unit or department).


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 routes
5. 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


Contacts

International Institute for Advanced Purchasing & Supply

EMEA Office Americas Office Asia Office

180 Piccadilly 7702 E. Doubletree Ranch Rd Suite 2702
London Suite 300 418-428 Jiang Ning Road
W1J 9HF, UK Scottsdale, AZ 85258, USA 200041 Shanghai, China
Tel : +44 (0)20 7917 6842 Tel : +1 480 348 3939 Tel : +86 (0)21 6217 0253
Fax : +44 (0)20 7439 0262 Fax : +1 480 991 0571 Fax : +86 (0)21 5228 8913

Email: info@iiaps.org Email: info@iiaps.org Email: info@iiaps.org


Developing an Advanced Competence in Purchasing & Supply

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