Procurement Services (PS) is transitioning from transaction-based roles and responsibilities to strategic responsibilities, aimed at directing Northern Illinois University’s vendors to provide best total value goods and services to staff, faculty and students. A basic, necessary tool for managing vendors is measuring vendors’ performance in key areas, using Key Performance Indicators (KPI).
KPI is a business metric used to evaluate factors that are crucial to the success of an organization. KPIs differ per organization. Procurement Services’ KPIs for vendors will be developed during Fiscal Year 2016 and implemented Fiscal Year 2017 timeframe, as PS’s strategic sourcing advances. The success of this initiative is dependent on the collaboration of Finance and Operations’ staff, and Faculty. This procedure summarizes the basis on which initial KPIs and the resulting vendor metrics and measurements will be formed. Please see the Supplier Performance Measurement Process graph at the end of this procedure for the initial KPIs.
Although KPIs are intended to measure strategic imperatives, initially the metrics will measure transactional-level vendor performance. The transactional level performance metrics, however, will reflect the University’s strategic imperatives, which are paraphrased to follow:
- Come together as a collaborative, mutually supportive and aligned NIU community
- Develop face-to-face connections with every NIU student, to understand their needs, thereby achieving desired retention, enrollment, learning and graduation outcomes.
- Achieve career fulfillment and fair compensation for faculty and staff
- Increase affordability of a high quality NIU education by seeking efficiencies in administration and operations.
- Maximize the value of the residential campus experience
- Significantly grow NIU as a leading public research university
- Enhance the global competitiveness and livability of our local economies
Maximizing value of the supplier’s relationship with NIU is the end, with the metrics and measurements as the meansby which the value is achieved. Procurement Services is not the sole determinant of supplier metrics; influencing, collecting and analyzing the supplier data is a cross-functional effort with operational, technology, academic and administrative departments. The process by which metrics and measurements are implemented drive performance more than the specific measurements themselves, hence the importance of cross-functional collaboration.
The metrics will focus on:
- Cost Competitiveness, leading to lower prices for NIU
- Requesting department’s satisfaction
- Contract compliance
- Continuous improvement, as shown through administrative excellence and presentation of innovations to benefit NIU
Essential to establishing metrics and measurements that bring value to NIU are the selection of vendors, and measuring only what is important to NIU and building the NIU-supplier alliance. The selection and initial measurement categories include:
- Criteria for choosing strategic vendors. Only the most important vendors (from a spend and/or strategic importance standpoint) should be measured. Qualifying for this category must be based on requirements agreed to by a cross-functional team, consisting of members from the user function(s), PS, and other departments, as relevant to the goods and/or services being purchased.
- NIU’s short-term and long-term goals
- Areas that will
- reflect NIU’s interests
- a joint NIU-vendor commitment to shared success
- provide early warnings of vendor performance that lead to poor quality
- resolution of problems
- Building NIU-vendor relationships that contribute to sound financial outcomes for both parties
- Measurements based on data that can be extracted through NIU’s existing software tools
- Predictive measures and measurements of outcomes
Once the metrics are defined based on internal NIU agreement, the metrics will be discussed with the key vendors. It is possible at that point for the metrics to be revised, if the vendors’ recommendations offer enhancements to the value to be achieved by both NIU and the vendor.