procurement maturity model assessment tool v2 11

8/10/2019 Procurement Maturity Model Assessment Tool V2 11

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PROCUREMENT MATURITY MODEL V2.1

DESCRIPTIONThe purpose of the Procurement Maturity Model or "PMM" is to provide a comparison of thecurrent practices of a procurement department to objective and qualitative best practices inprocurement. The best practices provided in the model were based on a variety of sources, andthe best practices are categorized by Measurement Area and Measurement Element. In thePMM Rating Input and Scores tab, the user inputs his or her Your Rating for a particular bestpractice based on the Current Practice, and formulas then calculate a rating based on theassociated weighting. The %age Difference Between Your Score and Best Practice Scorecolumn indicates, by color, areas for possible improvement.

The Measurement Area Scores tab (hidden) then summarizes the consolidated MeasurementAreas against best practices and provides an overall PMM score. The Graphed MeasurementArea Scores tab is a graphical representation of the PMM score.

Finally, the PMM Comparison Calculation tab (hidden) calculates data to populate the GraphicalPMM Comparison tab, which compares the scores of the input procurement department againstdifferent maturity levels, including world class.

INSTRUCTIONS / NOTESWhile this model represents best practices for the type of procurement department indicatedunder the Assumptions tab, the model can be customized as needed.Measurement Areas and Measurement Elements can be added or deleted, provided thatWeightingis adjusted to equal 100% per Measurement Area .Weightingcan be adjusted, provided that total of Weighting equal 100% perMeasurement

Area.

Weightingdata is contained in hidden columns. See "Tab Descriptions" for more information on

weighting criteria.

TAB DESCRIPTIONS

Assumptions - Describes the organizational profile of the procurement department most

applicable to the PMM.

PMM Rating Input and Scores Describes the Measurement Area Measurement Element


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PMM Rating Input and Scores - Describes the Measurement Area Measurement Element


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Measurement

Area

Measurement

ElementCurrent Practice

Your

Rating

Your

Calculated

Score

Customers Engagement

0. Customers avoid use of procurement department.

1. Procurement department reactive and demand driven; very few RFxprojects.2. Tendency for procurement department to be reactive; some pro-active

involvement with customers; few RFx projects.3. Significant pro-active involvement with customers early in their project

cycle; frequent RFx projects. 0 0

Formal process e

involvement of stcycle such that a

process can be c

Customers

ProcurementInstructions

0. No Procurement Instructions Manual.

1. Procurement Instructions Manual exists; incomplete or not current.2. Procurement Instructions Manual exists; complete and current.

3. Procurement Instructions Manual exists; complete and current; availableelectronically (e.g., company intranet). 0 0

Documented procatalog), which d

customers acquielectronically ava

Customers

RelationshipManagement

0. Customers viewed as adversaries.1. Customers are "tolerated;" unplanned or unintentional relationship

cultivation and maintenance.2. Relationships occur within the framework / lifespan of a transaction;

some planned relationship cultivation and maintenance; e.g., with keycustomers.

3. Relationships with customers actively and purposefully cultivated andmaintained. 0 0

Procurement depessential need of

management, ancultivate and mai

customers beyontransaction.

Customers Satisfaction

0. No satisfaction surveys conducted.

1. Customers sporadically solicited for verbal feedback.2. Satisfaction surveys conducted on a regularly scheduled basis; no

substantial corrective actions taken.3. Satisfaction surveys conducted on a regularly scheduled basis; corrective

actions taken and reported back to customers. 0 0

Regularly-schedu

customer satisfacprocurement dep

for which correctiCustomers made

corrective actions

Customers Status Reporting

0. No reporting.

1. On demand or ad hoc reporting.2. Scheduled reporting; incomplete, not current, or not useful for customer's

needs.3. Scheduled reporting; complete, current, and useful. 0 0

Regularly-schedu

customers in a soprovides current

purchases (such negotiations).

Customers Subtotal 0

Organization Best Practices

0. No best practices objective.1. Best practices objectives; not documented.2. Best practices objectives; documented; no or limited progress.

3. Best practices objectives; documented; substantial progress made. 0 0

Documented objeachievement of i

best practices.

0 No business plan


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Organization Mission Statement

0. No mission statement.

1. Mission statement exists; documented; department staff cannot recite oreasily identify location.2. Mission statement exists, documented; department staff can recite or

easily identify location.3. Mission statement exists, documented; department staff can recite or

easily identify location; regularly evaluated. 0 0

Documented anddepartment staff

for reference.

Organization Strategic Plan

0. No strategic plan.1. Strategic plan exists; documented; department staff unfamiliar with plan.

2. Strategic plan exists, documented; department staff familiar with plan orcan easily locate for reference.

3. Strategic plan exists, documented; department staff familiar with plan;executive management has approved and resourced plan. 0 0

Documented andrelevant and qua

resourced by exedepartment staff

Organization Structure

0. Decentralized; highly-fragmented; procurement may be done informally

by individuals or business unit departments (not procurement departments).1. Hybrid of centralized and decentralized procurement; business unit

procurement departments dotted-line to a company-wide procurementfunction (e.g., a procurement council).

2. Hybrid of centralized and decentralized procurement; business unitprocurement departments hard-line to a company-wide procurement

department.3. Centralized procurement department; raw materials sourced by a

separate department.3. Centralized procurement department responsible for company-wide

procurement of all goods and services, including direct and rawcommodities. 0 0

Highly centralized

is responsible forspend on procure

Organization Vision Statement

0. No vision statement.1. Vision statement exists; documented; department staff cannot recite or

easily identify location.2. Vision statement exists, documented; department staff can recite or

easily identify location.

3. Vision statement exists, documented; department staff can recite oreasily identify location; regularly evaluated. 0 0

Documented and

department staff for reference.

Organization Subtotal 0

0. No defined approval authority levels.1 Approval authority levels amounts are minimal (meaning the amount of


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Policy Delegation of Spend

0. "Rogue" spending prevalent.

1. Substantial spend delegated to departments or individuals outside of theprocurement department.2. Documented delegation of spend judiciously and appropriately made

within reasonable spend percentages; designated departments orindividuals perform procurement function with no oversight or procurement

standards provided by the procurement department.3. Documented delegation of spend judiciously and appropriately made

within reasonable spend percentages; delegated departments or individualsmust adhere to certain or all procurement standards.

3. No spend delegated outside of the procurement department. 0 0

Involved in at lea

Where spend catexcluded or deleg

delegations are d

Policy Procurement Authority

0. Authority for procurement department to purchase undefined.1. Authority to procurement department to purchase defined; not

documented.2. Authority for procurement department to purchase defined; documented.

3. Authority for procurement department to purchase defined; documented;regularly evaluated. 0 0

Defined, formalizprocurement acc

Policy Procurement Policy

0. No such document.1. Document exists; incomplete or not current.

2. Document exists; complete and current; procurement department stafffamiliar with document.

3. Document exists; complete and current; procurement department staffand internal customers familiar with document. 0 0

Documented andcontaining releva

department staff familiar with.

Policy

ProcurementStandards

0. No such document.1. Document exists; incomplete or not current.

2. Document exists; complete and current; procurement department stafffamiliar with document.

3. Document exists; complete and current; procurement department staffand internal customers familiar with document. 0 0

Documented and

containing relevadepartment staff

Policy Record Retention

0. No record retention policy.1. No record retention policy; staff maintain records based on personal work

practice.

2. Record retention policy exists; not adhered to or verified.3. Record retention policy exists; adhered to and verified. 0 0

Documented and

policy, consistentregulatory require

Policy Subtotal 0

0. No procurement department audits performed.1 Departmental audits performed; conducted by department


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Processes Forecast

0. No forecast for cost avoidance associated with projected procurement

spend.1. Forecast exists; incomplete.2. Forecast exists; not resourced.

3. Forecast exists; completed and resourced. 0 0

Documented speand resourced toopportunities for

procurement spe

Processes Negotiation Planning

0. Majority of negotations ad hoc and unplanned.

1. Significant amount of negotiations ad hoc and unplanned.2. Planning either informal or formal planning limited to only the largest

negotiations.3. Majority of negotiations planned; formal structure exists for developing

negotiation strategy. 0 0

Negotiations planprocurements, us

negotiation strateplanning process

customers and se

Processes

Purchase Order

Generation

0. Purchase orders not generated.

1. Purchase orders generated manually.2. Purchase orders electronically generated; not used across majority of

spend / commodities.3. Purchase orders electronically generated; used across majority of spend

/ commodities. 0 0

Purchase orders

cover 80% of all

Processes Spend Profile

0. No spend profile.

1. Only anecdotal or stale spend data exists.2. Spend profile is documented, but may be stale or provides only partial

information (e.g., spend by vendor but not by commodity).3. A spend profile is well-documented, refreshed no less than quarterly,

which indicates spend by vendor and major commodity; actively used byprocurement department staff to seek opportunities for savings, vendor

rationalization, and automation. 0 0

Spend profile is e

from a financial svendor and majo

used to identify orationalization, an

to automation.

Processes Subtotal 0

Staff Certification

0. Professional certification not required.1. Professional certification required (may be required only at certain

levels); employee funded.2. Professional certification required (may be required only at certain

levels); employer funded.3. Professional certification required (may be required only at certain

levels); employer funded; employees actively obtaining CEUs. 0 0

C.P.M. or other inrequired for proc

to job level).

0. Procurement department staff do not receive commodity training, ortraining is conducted in an ad hoc or unstructured manner.1. Procurement department staff receive less than twenty-four hours of

commodity training.2 Procurement department staff receive at least twenty four hours of


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Staff

Employee

Engagement

0. Procurement department staff not surveyed to determine level of

employee engagement.1. Procurement department staff surveyed on an informal basis todetermine level of employee engagement.

2. Procurement department staff surveyed by a third party to determinelevel of employee engagement.

3. Procurement department staff surveyed by a third party to determinelevel of employee engagement, and data is benchmarked against other

organizations (e.g., Gallup) 0 0

Third-party survedetermine level o

employee engagagainst other org

improve survey re

Staff General Training

0. Procurement department staff do not receive general training (customer

service, "soft skills," and tools-based skills) training, or training is conductedin an ad hoc or unstructured manner.

1. Procurement department staff receive less than twenty-four hours ofgeneral training.

2. Procurement department staff receive at least twenty-four hours ofgeneral training.

3. Procurement department staff receive at least twenty-four hours ofgeneral training; formal or external (not CBT) 0 0

Procurement depor more hours of

areas of customebased skills.

Staff Job Qualifications

0. No minimum procurement department staff job qualifications.1. Undocumented job qualifications for procurement department staff.

2. Documented job qualifications for procurement department staff; not well-defined.

3. Documented job qualifications for procurement department staff;certification, college degree, industry involvement, and significant

experience required for mid- to senior-level positions. 0 0

Documented job department staff,

positions requireprofessional desi

bachelor's degreeinvolvement in th

significant procur

Staff

Performance

Management

0. No performance management process.

1. Performance management conducted informally.2. Performance management conducted formally; annual or exception-

driven process.3. Performance management conducted formally; annual process with semi-

annual or quarterly reviews. 0 0

Formal, documenprocess, with at l

employee's past reviewed and cor

openly.

Staff

PerformanceObjectives

0. Procurement department staff do not have performance objectives.

2. Procurement department staff do not have a documented performance

objectives.2. Procurement department staff have a documented performance plan;ambiguous or poorly defined performance objectives.

3. Procurement department staff have a documented performance plan;well reasoned and detailed performance objectives 0 0

Annual, documen

with annual procplan and busines


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

ScoreStaff Subtotal 0

Tools

Contract ApprovalWorkflow Automation

0. No automated system.1. Automated system exists; not widely used.2. Automated system (developed in-house) implemented and in use.

3. Automated system (third-party) implemented and in use.X. No business case to support an automated system. 0 0

Contract approvausing a third-part

Tools

Contract Labor

Sourcing System

0. No automated system.

1. Automated system exists; not widely used.2. Automated system (developed in-house) implemented and in use.

3. Automated system (third-party) implemented and in use.X. No business case to support use of an automated system (contract labor

does not exceed 100 contractors annually). 0 0

Where contract la

annually, an autoto intake contract

customer based the need to appro

proposals / resum

Tools

Contract Management

System



3. Automated system (third-party) implemented and in use. 0 0

Automated third-contracts, from th

negotiation, and allows for input o

identification of ksavings / avoidan

as executed cont

Tools Contract Templates

0. No contract templates; vendors' contract templates used exclusively.1. Some contract templates exist.

2. Substantial number of contract templates exist.3. Substantial number of contract templates exist; procurement department

staff are well-trained on their use. 0 0

Substantial numb

and procurementtheir use, to addr

procurement sce

Tools eRFx




Third-party eRFxcompetitive bids.

Tools External Website

0. No website presence.

1. Static website presence; not current.2. Static website presence; current.3. Dynamic website presence oriented to vendors; interfaces to e-

procurement systems (such as vendor portal).X No business case to support use of tool 0 0

Dynamic externainformation to ve

procurement systactivities such as


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Tools

Procure-to-Pay

Process

0. No procure-to-pay process.

1. Limited procure-to-pay processes; some steps manual.2. Fully automated procure-to-pay processes; less than 50% ofprocurement spend flows through the processes.

3. Fully automated procure-to-pay processes; 50% or greater ofprocurement spend flows through the processes.

X. No business case to support use of a procure-to-pay process. 0 0

Fully automated through which a

greater) of procu

Tools

Requisition / PurchaseOrder System




Fully automated system, through w

generated for a sgreater) of procu

Tools Reverse Auctions

0. Reverse auctioning system not used for commodity purchases.1. Reverse auctioning system available for commodity purchases;

infrequently used.2. Reverse auctioning system available for commodity purchases;

frequently used.3. Reverse auctioning system available for commodity purchases;

frequently used; documented guideslines for use.X. No business case to support use of tool. 0 0

Online reverse a

commodity purchfor use of the too

Tools RFx Templates

0. No RFx templates.

1. RFx templates exist; procurement department staff use personalvariations of templates.

2. RFx templates exist; procurement department staff use standardizedtemplates.

3. RFx templates exist; procurement department staff use standardizedtemplates; procurement department staff are well-trained on their use. 0 0

Standard RFx temused by procurem

Procurement stafconducting RFx p

Tools Third-party Research

0. No access to third-party research.

1. Access to Internet research.2. Access to required research; requires some intervention or higher-level

approval before obtaining.

3. Access to required research; no or reasonable restrictions to access. 0 0

For commodities

department staff

party research.


1. Automated system exists; not widely used.2 Automated system (developed in house) implemented and in use

Vendors are prov

a third-party autoto conduct certain


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Value Contract Risk Level

0. Not measured.

1. Contract risk level is measured anecdotally; not recorded.2. Contract risk level is measured anecdotally; risk level recorded in acontract management system.

3. Contract risk level is measured objectively using pre-defined criteria; risklevel recorded in a contract management system. 0 0

Risk level of cont

using pre-definedrecorded in a con

Value

Contract Template

Ratio

0. Not measured or vendors' contract templates used exclusively.1. Less than 50% of all contracts executed using procurement department

contract templates.2. 50% or greater, but less than 80%, of all contracts executed using

procurement department contract templates.3. 80% or greater of all contracts executed using procurement department

contract templates. 0 0

80% or more of a

procurement dep

Value

Contract Turn-aroundTime

0. Not measured.

1. Less than 50% of all contracts negotiated and executed within 30calendar days.

2. 50% or greater, but less than 80%, of all contracts negotiated andexecuted within 30 calendar days.

3. 80% or greater of all contracts negotiated and executed within 30calendar days. 0 0

80% or more of aexecuted within 3

more of all contrawithin 60 calenda

Value

Cost Avoidance / CostSavings

0. Not defined or not measured.

1. Defined and measured; no goal2. Defined and measured; goal approved by management; goal not met.

3. Defined and measured; goal approved by management; goal met orexceeded. 0 0

Cost avoidance /

annual goal apprmet.

Value

RFx Turn-around

Time

0. Not measured.1. Less than 50% of all RFx projects completed and contracted within 60

calendar days.2. Greater than 50%, but less than 80%, of all RFx projects completed and

contracted within 60 calendar days.3. 80% or greater of all RFx projects completed and contracted within 60

calendar days. 0 0

80% or more of a

contracted withinmore of all RFx p

within 90 calenda

Value Subtotal 00. No approved vendor list.1. Approved vendor list; not maintained, not current.

2. Approved vendor list; actively maintained; less than 75% of spend isthrough approved vendors Formal current a


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Measurement

Area

Measurement


Your

Rating

Your

Calculated

Score

Vendors Vendor Qualification

0. No vendor qualification process.

1. Vendor qualification process exists; vendors qualified on an ad hocbasis.2. Formal process exists; process followed / performed.

3. Formal process followed / performed using an automated system. 0 0

Prospective vend

automated proce

Vendors Vendor Rationalization

0. No vendor rationalization program.1. Formal program exists; program not followed / performed.

2. No formal program; vendor rationalization performed on an ad hoc basis.3. Formal program exists; program followed / performed. 0 0

Vendor rationalizvendor base is re

and the vendor bthe pre-defined le

Vendors Vendor Recognition

0. No vendor recognition program.

1. Formal program exists; program not followed / performed.2. No formal program; vendors recognized on an ad hoc basis.

3. Formal program exists; program followed / performed. 0 0

Vendor recognitioare selected (bas

criteria) and recorecognition, such

performance.

Vendors Subtotal 0


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Customers

Organization

PolicyProcess

esStaff Tools Value Vendors

Your Measurement Area Score 0 0 0 0 0 0 0 0

Best in Class Measurement Area Score 3 3 3 3 3 3 3 3

0

0.5

1

1.5

2

2.5

3

3.5

Score

Procurement Maturity Model Score Comparison


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InhibitingPerforming(Miminum

Acceptability)Enabling Optimizing Best In Class World Class

SubjectProcurementDepartment

Overall PMM Score 0.50 1.00 1.50 2.00 2.50 3.00 0.00

DegreeofBestPractices

Procurement Maturity Model Comparison

procurement maturity model assessment tool v2 11

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