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PROCUREMENT MATURITY MODEL V2.

1
DESCRIPTION
The purpose of the Procurement Maturity Model or "PMM" is to provide a comparison of the
current practices of a procurement department to objective and qualitative best practices in
procurement. The best practices provided in the model were based on a variety of sources, and
the best practices are categorized by Measurement Area and Measurement Element. In the
PMM Rating Input and Scores tab, the user inputs his or her Your Rating for a particular best
practice based on the Current Practice, and formulas then calculate a rating based on the
associated weighting. The %age Difference Between Your Score and Best Practice Score
column indicates, by color, areas for possible improvement.
The Measurement Area Scores tab (hidden) then summarizes the consolidated Measurement
Areas against best practices and provides an overall PMM score. The Graphed Measurement
Area Scores tab is a graphical representation of the PMM score.
Finally, the PMM Comparison Calculation tab (hidden) calculates data to populate the Graphical
PMM Comparison tab, which compares the scores of the input procurement department against
different maturity levels, including world class.
INSTRUCTIONS / NOTES
While this model represents best practices for the type of procurement department indicated
under the Assumptions tab, the model can be customized as needed.
Measurement Areas and Measurement Elements can be added or deleted, provided that
Weighting is adjusted to equal 100% per Measurement Area .
Weighting can be adjusted, provided that total of Weighting equal 100% per Measurement
Area.
Weighting data 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 ,
Current Practice (ranked by point-based rating), Your Rating (an input of the Current Practice
point-based rating), Weighting (hidden column "E"), Your Calculated Score , Best Practice
standard, Best in Class Rating (hidden column "H"), calculated Best Practice Score , Calculated
and Area Weighted Variance (hidden column "J," used to determine variance between Your
Calculated Score and the Best Practice Score ), Significance of Gap (color-coded to indicate
areas of possible improvement), and Measurement Area Weighting (hidden column "L").
Measurement Area Scores - Summarizes Your Measurement Area scores and adjusts the
scores by additional Weighting (hidden column "D") criteria to calculate the Adjusted Your
Measurement Area Score . An Overall PMM Score is also calculated.
Graphed Measurement Area Scores - A graphical representation of the Adjusted Your
Measurement Area Scores compared to the Adjusted Best Practice Measurement Area Scores
contained in the Measurement Area Scores tab.
Graphical PMM Comparison - A graphical representation of the different levels of the PMM
model and how your procurement department compares.
COLOR LEGEND
Indicates an input area
Indicates a calculation
ASSUMPTIONS
The best practices contained in the Procurement Maturity Model are based on a procurement department with the following
attributes:
At least $50M in spend.
Spend is predominately for indirect commodities.
Commodities are predominately domestic.
There is more than one staff person; each staff person is 100% dedicated to the procurement function.
The procurement function does not include ancillary functions, such as warehouse management or traffic management.
DISCLAIMER
The PMM is not based on empirical data, nor are the results statistically objective. Rather, the PMM was developed using
real-world expertise from a variety of procurement professionals with an intent of creating a useable versus scientific model.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
Customers Engagement
0. Customers avoid use of procurement department.
1. Procurement department reactive and demand driven; very few RFx
projects.
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 exists which facilitates the
involvement of staff early in the customers' project
cycle such that an effective competitive bidding
process can be conducted. 1.2
Substantial Gap
Customers
Procurement
Instructions
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; available
electronically (e.g., company intranet). 0 0
Documented procurement instructions manual (or
catalog), which describes means by which internal
customers acquire goods or services, made
electronically available to internal customers. 0.075
Minimal Gap
Customers
Relationship
Management
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 key
customers.
3. Relationships with customers actively and purposefully cultivated and
maintained. 0 0
Procurement department staff understand the
essential need of customer relationship
management, and actively and purposefully
cultivate and maintain relationships with
customers beyond the framework / lifespan of a
transaction. 0.9
Substantial Gap
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-scheduled (no less than annual)
customer satisfaction survey actively used by
procurement department to identify deficiencies
for which corrective action is subsequently taken.
Customers made aware of survey results and
corrective actions planned / taken. 0.675
Substantial Gap
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-scheduled reports, provided to
customers in a sortable electronic format, that
provides current and accurate status of negotiated
purchases (such as RFx and contract
negotiations). 0.15
Significant Gap
Customers Subtotal 0 3
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 objectives directed toward
achievement of identified, externally-developed
best practices. 0.3
Significant Gap
Organization Business Plan
0. No business plan.
1. Business plan may exist; incomplete, ambiguous, or not fully
documented.
2. Basic business plan documented; no staff input or vision / mission
alignment.
3. Business plan documented; complete, staff input and vision / mission
alignment. Business plan items are specific, measurable, actionable,
relevant, and time-bound. 0 0
Documented annual business plan developed with
department staff input and purposeful thought,
aligned with the vision and mission of the
procurement department. Business plan items
are specific, measurable, actionable, relevant, and
time-bound. 0.6
Substantial Gap
Organization Executive Support
0. Executive management is unfamiliar with the procurement department.
1. Executive management is familiar with the procurement department.
2. Executive management is familiar with the procurement department; has
demonstrated some degree of support.
3. Executive management is familiar with the procurement department; has
demonstrated some or substantial degree of support through budget,
allocation of resources, or the like. 0 0
Strategic plan is supported by executive
management, and support is evidenced by the
allocation of resources, such as budget,
headcount, and training opportunities. 0.75
Substantial Gap
Page 3 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
Organization Mission Statement
0. No mission statement.
1. Mission statement exists; documented; department staff cannot recite or
easily 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 and current mission statement that
department staff can either recite or easily locate
for reference. 0.15
Minimal Gap
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 or
can easily locate for reference.
3. Strategic plan exists, documented; department staff familiar with plan;
executive management has approved and resourced plan. 0 0
Documented and current strategic plan, containing
relevant and quality content, approved and
resourced by executive management, that
department staff are familiar with. 0.15
Minimal Gap
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 procurement
function (e.g., a procurement council).
2. Hybrid of centralized and decentralized procurement; business unit
procurement 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 raw
commodities. 0 0
Highly centralized procurement department which
is responsible for at least 90% of all company
spend on procurement spend. 0.9
Substantial Gap
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 or
easily identify location; regularly evaluated. 0 0
Documented and current vision statement that
department staff can either recite or easily locate
for reference. 0.15
Minimal Gap
Organization Subtotal 0 3
Policy
Approval Authority
Levels
0. No defined approval authority levels.
1. Approval authority levels amounts are minimal (meaning the amount of
approval authority) and reflect excessive financial controls.
2. Approval authority levels are reasonable and reflect prudent financial
controls.
3. Approval authority levels are reasonable and reflect prudent financial
controls; documented guidelines exist for financial responsibilities. 0 0
Documented, formal approval authority levels that
are both reasonable (meaning few) and financially
prudent. 0.15
Minimal Gap
Policy
Business Continuity
Plan
0. No such plan.
1. Plan exists; incomplete or not current.
2. Plan exists; complete and current; procurement department staff familiar
with document.
3. Plan exists; complete and current; procurement department staff familiar
with document and cross-trained; plan has been tested. 0 0
Documented, formal business continuity plan that
identifies mission critical vendors and procedures
for acquiring products and services in the case of
a business disruption. Mock scenarios are
conducted with vendors no less than annually to
assess the capabilities of vendors as well as the
accuracy and comprehensiveness of the plan.
Procurement department staff are cross-trained
and have the ability to work remotely to
performance critical job functions. 0.6
Significant Gap
Page 4 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
Policy Delegation of Spend
0. "Rogue" spending prevalent.
1. Substantial spend delegated to departments or individuals outside of the
procurement department.
2. Documented delegation of spend judiciously and appropriately made
within reasonable spend percentages; designated departments or
individuals 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 individuals
must adhere to certain or all procurement standards.
3. No spend delegated outside of the procurement department. 0 0
Involved in at least 95% of the total spend profile.
Where spend categories or commodities are
excluded or delegated, such exclusions or
delegations are documented and formalized. 0.45
Significant Gap
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, formalized, and documented
procurement accountability and authority. 0.3
Significant Gap
Policy Procurement Policy
0. No such document.
1. Document exists; incomplete or not current.
2. Document exists; complete and current; procurement department staff
familiar with document.
3. Document exists; complete and current; procurement department staff
and internal customers familiar with document. 0 0
Documented and current procurement policy,
containing relevant and quality content, that
department staff and internal customers are
familiar with. 0.9
Substantial Gap
Policy
Procurement
Standards
0. No such document.
1. Document exists; incomplete or not current.
2. Document exists; complete and current; procurement department staff
familiar with document.
3. Document exists; complete and current; procurement department staff
and internal customers familiar with document. 0 0
Documented and current procurement standards,
containing relevant and quality content, that
department staff are familiar with and adhere to. 0.45
Significant Gap
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 formalized record retention
policy, consistent with organizational and / or
regulatory requirements, and compliance verified. 0.15
Minimal Gap
Policy Subtotal 0 3
Processes Audit
0. No procurement department audits performed.
1. Departmental audits performed; conducted by department.
2. Departmental audits performed; sporadically or infrequently conducted by
independent party.
3. Departmental audits performed; routinely performed by independent
party. 0 0
To ensure compliance with policies, procedures,
and processes, procurement department is
routinely audited (no less than annually) by an
independent party. 0.15
Minimal Gap
Processes
Competitive Bidding
Plan
0. Competitive bidding not routinely conducted.
1. No plan for anticipated competitive bids.
2. Some anticipated competitive bids documented; mostly an ad hoc
process.
3. Anticipated competitive bids documented; obtained through expiring /
terminating contracts reports and through meetings with internal customers. 0 0
Documented competitive bidding plans created
(annually) and resourced to identify and address
potential opportunities for expiring / terminating
contracts, re-bids, and new purchases. 0.75
Substantial Gap
Processes Cost Reduction Plans
0. No plan for cost reduction associated with pre-existing procurement
spend.
1. Plan exists; incomplete.
2. Plan exists; not resourced.
3. Plan exists; completed and resourced. 0 0
Documented cost reduction plans created
(annually) and resourced to identify and address
potential opportunities for cost savings related to
pre-existing procurement spend. 0.45
Significant Gap
Page 5 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
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 spend forecasts created (annually)
and resourced to identify and address potential
opportunities for costing avoidance on projected
procurement spend. 0.45
Significant Gap
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 planned for majority of
procurements, using a formalized structure for
negotiation strategy development. Negotiation
planning process tends to be inclusive of internal
customers and seeks their input. 0.6
Substantial Gap
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 generated electronically, and
cover 80% of all procurement spend. 0.3
Significant Gap
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 by
procurement department staff to seek opportunities for savings, vendor
rationalization, and automation. 0 0
Spend profile is extracted (no less than quarterly)
from a financial system and indicates spend by
vendor and major commodity. The spend plan is
used to identify opportunities for savings, vendor
rationalization, and driving low-value procurement
to automation. 0.3
Significant Gap
Processes Subtotal 0 3
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 industry-relevant certification
required for procurement department staff (subject
to job level). 0.15
Significant Gap
Staff Commodity Training
0. Procurement department staff do not receive commodity training, or
training 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
commodity training.
3. Procurement department staff receive at least twenty-four hours of
commodity training; formal or external (not CBT). 0 0
Procurement department staff received twenty-
four or more hours of commodity training annually. 0.15
Significant Gap
Staff
Customer
Engagement
0. Procurement department staff relatively unknown to customer; staff
unfamiliar with customer's business.
1. Procurement department staff known to customer; staff minimally familiar
with customer's business.
2. Procurement department staff valued by customer; staff has some
familiarity of customer's business.
3. Procurement department staff is integrated with customer department;
staff has solid understanding of customer's business. 0 0
Customers view procurement department staff as
virtual extensions of their own staff, engaging
procurement department staff in customer-specific
processes, such as customer staff meetings. 0.45
Substantial Gap
Page 6 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
Staff
Employee
Engagement
0. Procurement department staff not surveyed to determine level of
employee engagement.
1. Procurement department staff surveyed on an informal basis to
determine level of employee engagement.
2. Procurement department staff surveyed by a third party to determine
level of employee engagement.
3. Procurement department staff surveyed by a third party to determine
level of employee engagement, and data is benchmarked against other
organizations (e.g., Gallup) 0 0
Third-party surveys conducted annually to
determine level of procurement department staff
employee engagement; results are benchmarked
against other organizations and are acted upon to
improve survey results. 0.45
Substantial Gap
Staff General Training
0. Procurement department staff do not receive general training (customer
service, "soft skills," and tools-based skills) training, or training is conducted
in an ad hoc or unstructured manner.
1. Procurement department staff receive less than twenty-four hours of
general training.
2. Procurement department staff receive at least twenty-four hours of
general training.
3. Procurement department staff receive at least twenty-four hours of
general training; formal or external (not CBT) 0 0
Procurement department staff receive twenty-four
or more hours of general training annually in the
areas of customer service, "soft skills," and tools-
based skills. 0.15
Significant Gap
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 qualifications for procurement
department staff, staff seeking mid- to senior-level
positions required to have one or more
professional designations / certifications,
bachelor's degree in a relevant discipline,
involvement in the procurement industry, and
significant procurement experience. 0.45
Substantial Gap
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, documented performance management
process, with at least semi-annual reviews, where
employee's past and current performance is
reviewed and corrective action is discussed
openly. 0.45
Substantial Gap
Staff
Performance
Objectives
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, documented performance plans that align
with annual procurement department strategic
plan and business plan. 0.375
Significant Gap
Staff Procurement Training
0. Procurement department staff do not receive procurement training, or
training is conducted in an ad hoc or unstructured manner.
1. Procurement department staff receive less than twenty-four hours of
procurement training.
2. Procurement department staff receive at least twenty-four hours of
procurement training.
3. Procurement department staff receive at least twenty-four hours of
procurement training; formal or external (no CBT). 0 0
Procurement department staff receive twenty-four
or more hours of formal and external procurement
training annually. 0.3
Significant Gap
Staff Training Plan
0. Procurement department staff do not have a documented training plan.
1. Procurement department staff have a documented training plan;
sporadically followed.
2. Procurement department staff have a documented training plan; closely
followed.
3. Procurement department staff have a documented training plan; closely
followed; staff have training objectives included in annual performance plan. 0 0
Documented, formal training plan in place for
procurement department staff, closely followed,
and training objectives included in annual
performance plan. Training described by the plan
comprises no less than seventy-two hours
annually. 0.075
Minimal Gap
Page 7 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
Staff Subtotal 0 3
Tools
Contract Approval
Workflow 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 approvals and workflow are managed
using a third-party automated system. 0.075
Minimal Gap
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 labor exceeds 100 contractors
annually, an automated third-party system exists
to intake contract labor needs from the end
customer based on labor profile templates, routes
the need to approved vendors, and intakes
proposals / resumes from the approved vendors. 0.15
Minimal Gap
Tools
Contract Management
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. 0 0
Automated third-party system exists to manage
contracts, from the point of intake, through
negotiation, and to record retention. System
allows for input of vendor and contract data,
identification of key issues, documentation of cost
savings / avoidance, input of scanned items such
as executed contract, and reporting. 0.6
Substantial Gap
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 number of contract templates exist,
and procurement department staff are trained on
their use, to address at least 80% of possible
procurement scenarios. 0.6
Substantial Gap
Tools eRFx
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
Third-party eRFx system used for 80% of
competitive bids. 0.15
Minimal Gap
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 external website exists, provides
information to vendors and access to e-
procurement systems such as a vendor portal (for
activities such as vendor registration). 0.075
Minimal Gap
Tools Internal Website
0. No website presence.
1. Static website presence; not current.
2. Static website presence; current.
3. Dynamic website presence oriented to internal customers; interfaces to e-
procurement systems (such as an e-catalog).
X. No business case to support use of tool. 0 0
Dynamic internal website exists, provides
information to internal customers and access to e-
procurement systems such as an e-catalog. 0.075
Minimal Gap
Tools P-Cards
0. P-Cards not used.
1. P-cards implemented; minimal use.
2. P-cards implemented; use is sporadic.
3. P-cards implemented; use is defined (e.g., via policy).
X. No business case to support use of tool. 0 0
P-cards widely used, and a card issuer rebate has
been negotiated where p-card related spend
exceeds $1,000,000. 0.15
Minimal Gap
Page 8 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
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% of
procurement spend flows through the processes.
3. Fully automated procure-to-pay processes; 50% or greater of
procurement spend flows through the processes.
X. No business case to support use of a procure-to-pay process. 0 0
Fully automated procure-to-pay processes,
through which a significant portion (50% or
greater) of procurement spend flows. 0.15
Minimal Gap
Tools
Requisition / Purchase
Order 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 an automated system. 0 0
Fully automated requisitions and purchase
system, through which purchase orders are
generated for a significant portion (80% or
greater) of procurement spend. 0.3
Significant Gap
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 auctioning frequently used for
commodity purchases, and guidelines established
for use of the tool. 0.075
Minimal Gap
Tools RFx Templates
0. No RFx templates.
1. RFx templates exist; procurement department staff use personal
variations of templates.
2. RFx templates exist; procurement department staff use standardized
templates.
3. RFx templates exist; procurement department staff use standardized
templates; procurement department staff are well-trained on their use. 0 0
Standard RFx templates exist and are actively
used by procurement department staff.
Procurement staff follow a standard process for
conducting RFx projects. 0.3
Significant Gap
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 requiring research, procurement
department staff have required access to third-
party research. 0.075
Minimal Gap
Tools
Vendor Profile System
/ Vendor Portal
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
Vendors are provided with an external portal using
a third-party automated system to permit vendors
to conduct certain administrative functions (such
as submitting a W-9, certificate of insurance, or
financial information). 0.075
Minimal Gap
Tools
Vendor Relationship
Management 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 an automated system. 0 0
Vendor information, such as account contact
information and metrics (such as service levels),
are actively maintained and utilized using a third-
party automated system. 0.15
Minimal Gap
Tools Subtotal 0 3
Value Contract Disputes
0. Not measured.
1. The number of contract disputes are measured anecdotally; not
recorded.
2. More than 1% of all contracts executed result in a contract dispute within
the 12-month period following contract execution.
3. 1% or less of all contracts executed result in a contract dispute within the
12-month period following contract execution. 0 0
1% or less of all contracts executed result in a
contract dispute within the 12-month period
following contract execution. 0.3
Significant Gap
Page 9 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
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 a
contract management system.
3. Contract risk level is measured objectively using pre-defined criteria; risk
level recorded in a contract management system. 0 0
Risk level of contracts are objectively determined
using pre-defined criteria, with the risk level being
recorded in a contract management system. 0.3
Significant Gap
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 all contracts executed using
procurement department contract templates. 0.75
Substantial Gap
Value
Contract Turn-around
Time
0. Not measured.
1. Less than 50% of all contracts negotiated and executed within 30
calendar days.
2. 50% or greater, but less than 80%, of all contracts negotiated and
executed within 30 calendar days.
3. 80% or greater of all contracts negotiated and executed within 30
calendar days. 0 0
80% or more of all contracts negotiated and
executed within 30 calendar days, with 95% or
more of all contracts negotiated and executed
within 60 calendar days. 0.6
Substantial Gap
Value
Cost Avoidance / Cost
Savings
0. Not defined or not measured.
1. Defined and measured; no goal
2. Defined and measured; goal approved by management; goal not met.
3. Defined and measured; goal approved by management; goal met or
exceeded. 0 0
Cost avoidance / cost savings defined, measured,
annual goal approved by management, and goal
met. 0.75
Substantial Gap
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 all RFx projects completed and
contracted within 60 calendar days, with 95% or
more of all RFx projects completed and contracted
within 90 calendar days. 0.3
Significant Gap
Value Subtotal 0 3
Vendors Approved Vendor List
0. No approved vendor list.
1. Approved vendor list; not maintained, not current.
2. Approved vendor list; actively maintained; less than 75% of spend is
through approved vendors.
3. Approved vendor list; actively maintained; 75% or greater of spend is
through approved vendors. 0 0
Formal, current, and documented approved
vendor list exists, and is used to ensure that 75%
or greater of spend is through approved vendors. 0.75
Substantial Gap
Vendors
Measurements and
Metrics
0. Vendor performance not measured.
1. Vendor performance is measured anecdotally; not recorded.
2. Vendor performance is measured anecdotally; performance recorded
and tracked in a contract management or related system.
3. Vendor performance is measured objectively using pre-defined metrics;
performance recorded and tracked in a contract management or related
system. 0 0
Vendor performance is objectively measured
using pre-defined metrics, with performance
recorded and tracked in a contract management
or related system. Vendor performance
measurement may be related to procurement-
specific metrics (such as RFx win rate) and / or
contract-specific metrics (such as service levels). 0.9
Substantial Gap
Vendors Vendor Categorization
0. No vendor categorization process.
1. Vendor categorization process exists; vendors categorized on an ad hoc
basis.
2. Formal process exists; process followed / performed.
3. Formal process followed / performed; internal customers understand
process for decision-making purposes. 0 0
Formal hierarchy of vendor categories exist, with
vendors assigned (via a system or documentation)
to the categories. Customers understand the
process, and use the process for decision-making
purposes. 0.45
Substantial Gap
Page 10 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Measurement
Area
Measurement
Element
Current Practice
Your
Rating
Your
Calculated
Score
Best Practice
Best
Practice
Score Significance of Gap
Vendors Vendor Qualification
0. No vendor qualification process.
1. Vendor qualification process exists; vendors qualified on an ad hoc
basis.
2. Formal process exists; process followed / performed.
3. Formal process followed / performed using an automated system. 0 0
Prospective vendors are qualified using a formal,
automated process. 0.525
Substantial Gap
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 rationalization program exists where the
vendor base is reduced subject to program criteria
and the vendor base is pro-actively managed to
the pre-defined level. 0.3
Significant Gap
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 recognition program exists where vendors
are selected (based on quantitative and qualitative
criteria) and recognized (with some sort of formal
recognition, such as a press release) for their
performance. 0.075
Minimal Gap
Vendors Subtotal 0 3
Page 11 of 13 Copyright (c) 2008 by Stephen R. Guth, Esq.
Custom
ers
Organiz
ation
Policy
Process
es
Staff 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
S
c
o
r
e

Procurement Maturity Model Score Comparison
Inhibiting
Performing
(Miminum
Acceptability)
Enabling Optimizing Best In Class World Class
Subject
Procurement
Department
Overall PMM Score 0.50 1.00 1.50 2.00 2.50 3.00 0.00
D
e
g
r
e
e

o
f

B
e
s
t

P
r
a
c
t
i
c
e
s

Procurement Maturity Model Comparison

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