How design impacts procurement contract performance

How to ensure your approach to contract performance management is fit for purpose

While using our new vacuum cleaner the other day I realised how the design of this shiny new appliance was in fact more than just cleverer engineering. The principles of its design were also very clever. In fact, they are even more important than the engineering.

Sounds a bit esoteric I know but hear me out.

Having downsized from a big house to a smaller apartment we realised that the floors in our new place were not as clean as they should be. Why? Because the effort required to pull out, assemble and run our vacuum cleaner meant that it wasn’t happening as often as it should be.

That’s not to say the vacuum cleaner wasn’t a decent piece of equipment – far from it.

It had a huge amount of power and all the attachments you could think of and a few I still didn’t know how to use!

What it lacked was ease of use.

It took too long to set up and too big. As a result, it was only used sparingly and so the floors were often not cleaned.So, in looking for a better solution, we agreed that ease of use was key to our requirements.

As a result we ended up with a stick cleaner. Although it doesn’t have the same suction power, needs recharging all the time, has a much small unit for collecting the dust and other crud from our floor, our floors have never been cleaner.

Why? Because it’s so easy to use!

You can kick it up off a wall mounted power source, pull the trigger and have it put away in less time that it would take just to get the old unit set up.

What’s my vacuum cleaner got to do with contract performance management?

As it turns out, lots.

Most performance management systems that fail, don’t fail because they can’t do the job. They fail because they are too hard to use, take too much effort and as a result, don’t get used as much as they should.

The design of the performance system is flawed because it doesn’t take into account the other aspect of success including how it is going to be used.

Too often contract (and many other organisational performance systems) are designed based on a comprehensive assessment of all performance aspects required so managers can feel comfortable that things are on track.

When implemented, while it may be a powerful system, it doesn’t get used because it’s too hard to apply on a regular basis.

A new way to think about performance management

Start by making an honest assessment of how much time and effort are available to undertake the performance system. If that is just two hours a week then use this as a basis for designing the measures and processes.

Although you may not have something quite as powerful, it will be much more effective because it’s going to get used!

If you still have concerns then think about a secondary, less frequent but much more thorough performance assessment. These could be six monthly or annual reviews or audit of major contracts or systems.

Think of these as spring cleaning! You don’t do them often but they are supported by regular smaller cleans throughout the year.

By using a clear set of deign principles to establish you processes, systems and measures of performance you will achieve better outcomes… and, much cleaner floors!

The three keys to procurement driven cost reduction and performance improvement

A game changing guide for modern (next generation) procurement professionals.

Being able to influence the business on how to use all available procurement levers, not just aggregation and tendering, is critical to drive the next wave of procurement savings and benefits for your business.

Great in theory but how can we as a profession effect significant change to such a well-entrenched and established way of working?

Perhaps the first and most important step is to think differently and not be afraid to question conventional thought.

In this guide we introduce to you three game changing ways of viewing and approaching existing business problems, namely:

  1. Getting performance from suppliers is the same as getting performance from staff
  2. Tenders no longer generate savings – you have to pull all four spend levers
  3. Procurement must become a trusted internal advisory team

This is not just theory, from our research of more than 250 Australian organisations we know that turning the ship around to better source and manage suppliers leads to an increase in performance of 29 percent!

Download your copy where we turn the world of procurement on its head, challenge the status quo and share our insights for dramatic supplier performance improvement.