Procurement Performance Indicat

Guide

Using Procurement Performance Indicators to Stren

JANUARY 2013
This publication was produced for review by the U.S. Agency for International Development. It was prepared by t
USAID | DELIVER PROJECT, Task Order 4.

Procurement Performance
Indicators Guide

Using Procurement Performance Indicators to Strengthen

The authors' views expressed in this publication do not necessarily reflect the views of the U.S. Agency for
International Development or the United States Government.
USAID | DELIVER PROJECT, Task Order 4

The USAID | DELIVER PROJECT, Task Order 4, is funded by the U.S. Agency for International
Development (USAID) under contract number GPO-I-00-06-00007-00, order number AID-OAA-TO-10
00064, beginning September 30, 2010. Task Order 4 is implemented by John Snow, Inc., in collabora
PATH; Crown Agents Consultancy, Inc.; Eastern and Southern African Management Institute; FHI 36
Futures Institute for Development, LLC; LLamasoft, Inc.; The Manoff Group, Inc.; Pharmaceutical He
Recommended Citation

USAID | DELIVER PROJECT, Task Order 4. 2012. Procurement Performance Indicators GuideUsing
Abstract

This guide provides procurement managers with performance indicators and information on how to i
Cover photo: Logistics staff person at supply closet in Nepal.
USAID | DELIVER PROJECT
John Snow, Inc.
1616 Fort Myer Drive, 16th Floor
Arlington, VA 22209 USA
Phone: 703-528-7474
Fax: 703-528-7480
Email: askdeliver@jsi.com
Internet: deliver.jsi.com

Contents

Introduction .............................................................................................................................................
The Indicators...........................................................................................................................................

1.
Product Price Variance: Are Competitive Prices Paid for Focus Products?.........................................
2.
Effective Contract Utilization: Are Efficient Procurement Mechanisms Being Used? ........................
3.
Expiration Management: Can Product Expiration be Reduced through Good Procurement
Practices? ................................................................................................................................................
4.
Supplier Performance: Are Suppliers Delivering the Right Goods at the Right Time?....................11
5.
Procurement Cycle Time: Are There any Delays in the Procurement Cycle? .................................14
6.
Payment Processing Time: Are There any Delays in Processing Payments? ....................................
7.
Emergency Procurement: Are Emergency Orders Frequently Used to Prevent Stockouts? ........19
8.
Procurement Cost: Is the Procurement Unit Operating Efficiently? ..................................................
9.
Staff Training: Is a Funded, Operational Training Program in Place that Provides Staff with
Appropriate Training to Maintain or Upgrade their Procurement Skills?...........................................23
10. Transparent Price Information: Are Procurement Prices Available to the Public?...........................25
11. Transparent Tendering: Are Procurement Methods Being Used that Promote Competition? ....26
References ...............................................................................................................................................
Appendices
A. Identifying and Creating a Basket of Focus Products............................................................................
B. Using International Reference Prices to Identify Price Variances .........................................................
C. Supplier Performance Scorecard .........................................................................................................
D. Additional Resources ...........................................................................................................................
Tables
1. Procurement Performance Indicators ...................................................................................................
2. Purchase Categories.............................................................................................................................
iv

Introduction
Audience

This guide is intended for procurement managers at ministries of health and central medica

Purpose

The purpose of this guide is to provide procurement managers with a small set of performan
Monitoring procurement system performance provides managers with the information they

Content

The procurement performance indicators presented in this guide are drawn from a larger bo

here: http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/ProcPerfIndiTemplate.x
A summary list of the procurement performance indicators can be found in table 1.

Approach

While establishing performance indicators and gathering data from them is an important firs

Additional Resources

For procurement managers who want to implement a more comprehensive set of performance
indicators, or to learn how other countries have used such indicators to improve procurement performance, additional resources can be fo

Procurement Performance
Indicators
Table 1. Summary of Procurement Performance Indicators
No
Indicator
How It Can Improve
Description
Name
Performance
1

Product Price
Variance

Effective
Contract
Utilization

Expiration
Management

Supplier
Performance

Performance
Category

Prices paid for focus goods are in Percentage price variance

Cost
alignment with international
between contract unit price and
prices
international unit price for focus
products
Efficient procurement
Percentage by value of
Cost
mechanisms are being used
purchases made under simple
purchase
orders, annual contracts, and
contracts
Good supply chain practices are multiAnnualyear
dollar
value of expired
Quality
being used, including inventory products or percentage value of
management, demand
expired products
management, and the timely
supply of good quality products
A) Supplier delivers the correct
goods

Percentage of orders in
Quality
compliance with contract criteria

B) Supplier delivers goods on

time

Percentage of orders delivered

on time

Procurement
Cycle Time

There are no delays in executing Percentage of procurements

procurements
completed (placed) within
standard time guidelines

Payment
Processing
Time

There are no delays in

processing payments to
suppliers

Emergency
Procurement

Good supply planning practices

are being used

Procurement
Cost

Staff Training

10

Timeliness
Timeliness

Percentage of supplier payments Timeliness

made within the payment period
called for in the contract
Systems
Productivity

Transparent
Price
Information

Percentage, by value and

number, of purchase orders or
contracts issued as emergency
orders
Level of efficiency of operations Ratio of annual procurement unit
in procurement unit
cost-to-value of annual
An effective training program is purchases
Key training program
in place to improve procurement components are in place and the
staff skills
percentage of staff who receive
training annually
The level of product pricing
Percentage of products with
information that is available to
prices posted on publicly
the public
accessible website

No

Indicator
Name

How It Can Improve

Performance

Description

Performance
Category

11

Transparent
Tendering

The level of competition

achieved through a competitive
bidding process

Percentage of total value of

contracts that were awarded
through an open and
competitive process

Integrity

Systems
Productivity
Systems
Productivity

Integrity

In the following pages, additional information is provided for each of the indicators identified
table 1, including the formula for calculating the indicator, guidance on setting an appropria

1. Product Price Variance: Are Competitive Prices Paid for

Focus Products?
This indicator measures the percentage price variance between the contract unit price paid
Frequency: Annually
Formula

Target

Price paid for focus item1

100
International Reference Price2 (IRP) of item

Less than (<) or equal to (=) 100%

How to Use the Results

For each item with a result greater than 100%
(>
100%): the price paid is higher than the IRP

Action: Investigate where changes can be

made in procurement practices to achieve
more competitive pricing for selected
focus items

For each item with a result less than or equal

Action: No action needed; however,
to
prices should continue to be monitored
100% (< or = 100%): the price paid is aligned with
the
IRP
Data Needed
Data Sources
For a specific evaluation period (e.g., Jan.Dec.):
Contracted prices for focus items
IRP for focus items

Purchase orders or contracts issued by

procurement unit during evaluated time
period.
For IRP sources, see appendix B.

How to Illustrate the Results

Product Price Variance
200%
100%
0%

Items with prices h

IRP = 100%
Items with prices the same or lower than IRP
1
2

See appendix A for guidance on selecting focus products.

See appendix B for guidance on using IRPs.

2. Effective Contract Utilization: Are Efficient Procurement

Mechanisms Being Used?

This indicator measures the percentage, by value, of three categories of purchases (purchas
Frequency: Annually
Formula

Target

Annual spend for purchase category

Baseline (historical) performance to
100
be determined by procurement unit
Total annual spend of all purchases3
The sum of the percentages of the three purchase
categories must equal 100%
Setting the Target
The procurement manager should review the purchasing history to establish the baseline percentages
for each of the three general categories of purchases identified in table 2. Ideally, multi-year contracts
It would be inappropriate to assign multi-year contracts or annual contracts with a target ratio of 100%
such items. Similarly, purchase orders should not have a target of 0%.

See the Notes section below for information on segmenting and reviewing the purchasing hi
Table 2. Purchase Categories
Purchase Category
Description
Purchase order
Single order, single delivery, no underlying contract
Annual contract

Single order or contract, multiple deliveries, single year

Multi-year contract

Single contract, multiple orders and/or multiple deliveries, multiple

years;
3 Total annual spend of all purchase orders and contracts issued during the designated time period.
includes framework contracts.4
4

A framework agreement is an arrangement between the buyer and supplier where both parties agree to the terms of future dealings betwe

How to Use the Results

The percentage of purchase order
value is greater than the annual
contract and multi-year contract
value: this indicates that purchasing is
primarily ad hoc rather than planned,
and that few contracts are in place.

Action: Review purchase orders to identify products

that can be considered for annual contracts or multiyear contracts.
Conduct an 80/20 analysis5 of annual purchases to
identify priority value items that could be considered for
annual contracts or multi-year contracts.
Group like priority items identified in the 80/20
analysis into procurement packages for bidding
purposes.
Note: See appendix A for guidance on conducting an
80/20 analysis of purchased products.

The percentage of multi-year

contracts is zero: no multi-year
contracts (including framework
contracts) are in use.

Action: Investigate and identify steps needed to

introduce and use multi-year (or framework) contracts.
This may include the following:
Review national procurement regulations to ensure
that policy barriers limiting the use of this type of
contract do not exist.
Identify sample contracts that can be adapted for
use.
Identify funding and technical resources to support
staff training on how to use this type of contract.
Data Sources

Data Needed

For a specific evaluation period (e.g.,

Purchase orders or contracts issued by the
Jan. Dec.):
procurement unit during the evaluated time period
Value of each item purchased
Value of goods procured under each
purchase category
Total value of goods procured
How to Illustrate the Results
100%
75%
50%
25%
0%

Contract Utilization
61%
24%
15%
Purchase Order
Annual Contract
Multi-Year Contract

An 80/20 analysis looks at the total value of each item procured, assuming that approximately 80% of the total annual spend is covered by
of the items procured. Focusing on fewer high-priority items allows the procurement unit to concentrate their efforts on those items that ma
5

Notes on segmenting and analyzing purchase history:

Because requirements for goods and services are constantly changing, an analysis of the pu
1. Collect the annual purchasing data indicated and group purchases into the three genera
2. Calculate the percentage by value for each category using the formula given above.
3. Review the results. Initially, purchase orders will likely have the largest percentage, follo
4. To identify items that could be considered for annual contracts or multi-year contracts, c
The objective of this approach is to, over time, move the higher value or priority purchases t
efficient contracting mechanisms. The higher the percentage of annual contract or multi-yea

3. Expiration Management: Can Product Expiration be

Reduced through Good Procurement Practices?

This indicator measures the annual dollar value of products purchased by the procurement u

Note: For programs that receive donated products, this indicator can also be adapted to mea
Frequency: Annually
Formula
Sum of Expired Product Value:
The total value of products purchased by the procurement
unit that have expired before usage.

Target
$0.00

Percentage of Expired Product Value:

Total value of expired product
100
Total value of products procured annually

0%

Setting the Target

The ideal target for annual expired product value would be $0.00 or 0%. This may be difficult to achie
however, given the various factors that contribute to product expiration. The inventory management u
How to Use the Results
Results are higher than predetermined target
Action: Working together, the planning/ procurement/
inventory management units should identify activities where
problems contributing to product expiration might occur, such as
forecasting accuracy
inventory practices, such as first in-first out (FIFO)
accuracy stock on hand against inventory records
supplier adherence to expiration date requirements
supplier adherence to delivery dates, etc.
This information can be used to identify areas where
improvements can be made. For effective corrective action to occur, it is important to identify the root
For donated products, it is important to identify the root
cause of product expiration and the donor of the product. If
expiration is due to receiving donated goods with a short
shelf life, the supporting documentation should be shared
with the donor, including a request to comply with good
donations practices, as stipulated by the World Health
Organization (WHO).
Results are lower than predetermined target or are $0.00
(0%)
Data Needed

Action: Provide positive feedback to the

planning/procurement/ inventory management units to
acknowledge the good/improving performance and to
encourage the continued use of good procurement
practices.
Data Sources

For a specific evaluation period (e.g., Jan.Dec.):

Date that expired product was removed from
inventory*
Original purchase order value of expired product*
Total value of products procured annually*
*To calculate expiries for donated products, limit
inventory counts to donated product only.

Stores inventory records

Purchase orders or contracts issued by
procurement unit during evaluated time
period.

How to Illustrate the Results

Total Annual Value of Expired Product

Purchased by Procurement Unit
Thousands
$250
$200
$150
$100
$50
$0
Year 1

Year 2

Value of Expired Product as % of Total

Annual Value of Products Purchased by
Procurement Unit
25%
20%
15%
10%
5%
0%
Year 1

Year 3

Year 2

Year 3

4. Supplier Performance: Are Suppliers Delivering the Right

Goods at the Right Time?

These indicators measure a suppliers compliance with the product and performance criteria

A) The product order compliance indicator measures the percentage of orders for each supp

B) The lead time performance indicator measures whether the orders for each supplier were
This indicator is measured for an individual supplier.

Frequency: Monthly. For each supplier, record the data in monthly time segments. The monthly dat
can be added and reported back to the supplier as a performance indicator for a given month, quarter
or year.
Formula*
Target
A. Product order compliance:
No. of orders meeting all product criteria
100
Total number of orders received6
B. Lead time performance:
No. of orders received on time
100
Total number of orders scheduled for delivery 7

100%

100%

Setting the Target

The ideal target for supplier product performance is 100%. However, some suppliers may not be
achieving this target. In these cases, the procurement unit should review past performance and estab
*See notes below for additional information on calculating these indicators
6
7

Total number of orders received during a designated time period.

Total number of orders received during a designated time period.

How to Use the Results

Results are less than 100% Action: Identify the areas of non-compliance to the supplier with
a request for a corrective action plan and implementation
schedule. For supplier performance information to be useful and
effective, it needs to be shared with the supplier on a routine
basis, such as once a month or once a quarter.

Results are 100%

Action: Provide positive feedback to the supplier to acknowledge

the good/improving performance and encourage continued
supplier commitment to providing product quality and service.

For a specific evaluation period: Product order

Purchase orders or contracts issued by
compliance
procurement unit during time period evaluated
Order criteria as specified in purchase order or Inspection/test reports
contract
Shipment invoice
Order receipt confirmation
Receiving reports/goods received voucher
Details of shipment received

Lead time performance

Order criteria, as specified in purchase order
or contract
Purchase order delivery schedules
Order receipt confirmation
Details of shipment received

Percentage of Orders in Compliance

100%
90%
80%
70%
60%
50%
A

Suppliers

Lead Time Performance

100%
90%
80%
70%
60%
50%
A

Suppliers

Notes on calculating product order compliance

1. Identify the criteria that will be used to monitor the product order compliance. The crite
a. correct product received
b. correct amount received
c. product correctly packaged and labeled
d. product received undamaged
e. product received with adequate shelf life remaining
f. product passes any quality testing identified as a requirement.
2. This activity requires information from shipping/receiving personnel at the warehouse, s
receiving report, test report, or shipment invoice. Procurement personnel must coordinate w
3. Review the shipment information against the stated product criteria and record findings
4. Data from the supplier performance scorecard is then used to determine the number of u
Notes on calculating lead time performance
1. Identify the criteria that will be used to monitor lead time performance. This criteria sho
a. shipment received on time according to contract schedule

b. all goods on the order were received (shipment was fully delivered)
c. correct shipping documents were received on time.

2. Review the product purchase order or contract and/or shipping schedule to identify the r
delivery date. This will often be the delivery date to the purchasers main warehouse; howev
3. Obtain a copy of the receiving report or shipment invoice that identifies the dates the pr
4. Review the dates the product was received against the required delivery dates stated in
5. Review compliance with other delivery schedule criteria and record findings.
6. Data from the supplier performance scorecard is then used to determine the number of o

5. Procurement Cycle Time: Are There any Delays in the

Procurement Cycle?
This indicator measures the average length of the procurement cycle and the percentage of
The procurement cycle time is measured for contracts and purchase orders using historical
Frequency: Annually. However, the data can also be recorded and monitored in monthly or
quarterly time segments, depending on the volume of purchasing transactions handled by the
procurement unit, and the desired performance objectives.
Formula
Target
Number of purchase orders or contracts completed
within the procurement cycle time guideline
100
Total number of purchase orders or contracts awarded 8

100%

Setting the Target

To set the target, the procurement unit must first review past performance to measure the number of
days in the procurement cycle. A historical baseline can be established by reviewing the procurement
How to Use the Results
Results are less than 100%

Results are 100%

Action: Review the delayed purchases and identify at

which stage of the procurement cycle the delay
occurred. Meet with the appropriate personnel
responsible for that stage to determine the cause of
the delay and develop possible solutions to prevent
future delays.
Action: Provide positive feedback to acknowledge the
good/improving performance and to encourage
continued timely preparation, submission, approval,
and placement of purchase orders and contracts.

Total number of orders received during a designated time period.

Data Needed

For a specific evaluation period:

Dates purchase requisition submitted by
requester/department for approval
Date purchase requisition approved
Dates bidding process initiated and closed
Dates bids evaluated and supplier selected
Date purchase order/contract created
Date purchase order/contract signed by both parties
Date purchase order/contract issued to vendor and
order placed

Purchase requisitions
Purchase order and contract
records
Tender documents
Purchase or tender committee
meeting notes

Percentage of Purchases Completed Within Procurement Cycle Time Guidelines

100%
90%
Standard Time Guideline
Purchase Orders 30 days
Contracts
60 days
80%
70%
60%
90%
91%
93%
96%

rders

2011

Contracts

2012

Note on establishing procurement cycle time guidelines

1. Identify key transactions in the procurement cycle: Review the standard procureme
2. Review historical data to establish baseline: Review procurement records for the pr
cycle time for the product.
For goods that are procured on an annual basis (annual tendering process), review procurem
3. Set standard guideline: The average cycle times calculated in step 1 can be used as th
reviewed to identify areas for improvement. For example, if the average number of days betw
stage can be set at a lower number of days; this will act as a performance improvement targ
ance: Record and monitor the total number of days required
t cycle, using a worksheet similar to the example below.
Procurement Cycle Time Monitoring Worksheet Example
Task
Responsible Date
Actual Time Standard
Difference
Group
(days)
Guideline (days) (days)
Requisition submitted
Requisition approved
Bidding process initiated
Bidding process closed

Bids evaluated
Supplier selected
PO/contract created
PO/contract approved
PO/contract placed
Total Number Days

6. Payment Processing Time: Are There any Delays in

Processing Payments?

This indicator measures the percentage of supplier payments that were made within the pay
Frequency: Quarterly or Semi-annually
Formula
Number of supplier invoices paid on time
100
Total number of supplier invoices paid9
Setting the Target

Target
100%

Payment terms are typically agreed to in the contract or purchase order. The ideal target for on-time
payments is 100%. However, some organizations may have difficulty achieving this target. In these ca
rate should be set at a level that is above the baseline rate for supplier invoices paid on time; this will
How to Use the Results
Results are lower than the predetermined target

Action: Review late payments to determine the cause for

delays; i.e., delays in processing paperwork, delays in
approvals (signatures), etc. Meet with the appropriate
departments to share information on the number of late
payments and the cause of the delays, to encourage
efforts to improve on-time payments.

Results are above the predetermined target

Action: Provide positive feedback to acknowledge the

good/improving performance and encourage continued
timely payment of supplier invoices.

Data Needed
For a specific evaluation period:
Date invoice received
Invoice due date
Actual payment date
9

Data Sources
Contracts or purchase orders that identify payment
terms
Goods received notice
Accounts payable information that identifies date
invoice paid

Total number of orders received during a designated time period.

100%
90%
80%
70%
60%
50%
w to Illustrate the Results

of Supplier Invoices Paid on Time

Q1

Q2

Q3

Q4

2012

7. Emergency Procurement: Are Emergency Orders

Frequently Used to Prevent Stockouts?

This indicator measures the percentage of purchase orders or contracts that are issued as e
Frequency: Annually
Formula
% Value of Emergency Orders10 placed:
Total value of emergency orders
100
Total value of all orders placed11
% of Number of Emergency Orders placed:
Total number of emergency orders
100
Total number of all orders placed12

Target
To be determined by procurement unit
based on historical performance

To be determined by procurement unit

based on historical performance

Setting the Target

The procurement unit should review past performance and establish baselines for the percentage valu
for emergency orders placed and the percentage of the number of emergency orders placed. A low pe
baselines so they raise performance expectations and encourage a process of continuous improvemen
How to Use the Results
Results are above preAction: Investigate the reasons why emergency purchase
determined target
orders were issued. This could be due to a lack of planning,
delay in budget
approval, natural disaster, etc. Identify situations where
remedial action can be taken to avoid issuing emergency orders
and
implement
solutions.
Results are below preAction:
Providerecommended
positive feedback
to the departments to
determined target

acknowledge the good/improving performance and to

encourage the continued use of good procurement practices.

Data Needed
Data Sources
For a specific evaluation period (e.g., Jan.Dec.): Purchase orders or contracts
Value of orders placed as emergency orders
Purchase requisition
Total value of orders placed
Procurement log (database)
Number of orders placed as emergency orders
Total number of orders placed

If an official definition of an emergency order does not exist, then, to implement this indicator, an emergency order will be considered to b
an order with a lead time of one month or less.
11 Total number of orders received during a designated time period.
12 Total number of orders received during a designated time period.
10

How to Illustrate the Results

ge of Value of Emergency Orders
aced by Procurement Unit
40%
30%
20%

10%
0%
Year 1

Year 2

Year 3

Percentage of Number of Emergency

Orders Placed by Procurement Unit
40%
30%
20%
10%
0%
Year 1

Year 2

Year 3

8. Procurement Cost: Is the Procurement Unit Operating

Efficiently?

This indicator measures the average cost associated with procuring goods against the total v
Frequency: Annually
Formula

Target

Procurement Unit Cost by Value of

Purchases:
Total costs allocated to procurement13
100
Total value of annual purchases

To be determined by procurement unit based

on historical performance

Procurement Unit Cost by Number of

Purchases:
Total costs allocated to procurement
100
Total number of annual purchases

To be determined by procurement unit based

on historical performance

Setting the Target

The procurement manager should review past procurement unit costs and establish a baseline value f
procurement unit costs. The lower the value, the more efficient the procurement operation is in implem
How to Use the Results
Results are above predetermined target

Results are below predetermined target

Action: Procurement management should investigate why the

cost of procurement has increased, or look for efficiencies to
reduce procurement costs; but, not at the expense of
compromising the units ability to provide timely and effective
procurement services.
Action: No action needed. Target rate should be adjusted
appropriately, over time, as efficiencies are achieved. Changes
to the structure and responsibilities of the procurement unit
should also be considered.

Costs allocated to procurement of goods include procurement staff time, a portion of facilities cost, and utilities cost. Allocated procureme
costs do not include freight charges, brokerage charges, tariffs, or taxes.
13

Data Needed

Data Sources

For a specific evaluation period (e.g., Jan.Dec.):

Procurement costs annualized and prorated
appropriately
Labor costs for all procurement personnel
Appropriate facilities costs prorated for the
procurement unit
Utility costs prorated for procurement unit
Annual value and number of purchases
processed by the procurement unit

Procurement records
Annual reports
Costs:
human resource records (labor costs)
facilities records
accounting department

How to Illustrate the Results

Procurement Unit Cost by Value of
Purchases (cost per dollar)
$0.20
$0.15
$0.10
$0.05
$0.00
Year 1

Year 2

Year 3

Procurement Unit Cost by

Number of Purchases
(cost per purchase order or contract)
$1,150
$1,100
$1,050
$1,000
$950
$900
Year 1

Year 2

Year 3

9. Staff Training: Is a Funded, Operational Training Program

in Place that Provides Staff with Appropriate Training to
Maintain or Upgrade their Procurement Skills?

This indicator measures whether an effective training program is in place and whether the p
Three key components need to be in place for an effective training program:
A budget line item that is approved and adequately funded

An organizational chart with up-to-date job descriptions that are used to guide staff devel
A formal training plan and schedule that offers appropriate training for each cadre

With these components in place, management must also ensure that training is provided to a
of staff, on an annual basis.
Frequency: Annually
Formula

Target

Total the percentages assigned to each training component,

and
for provision of training
Training Components (25% each):
1. Budget line item (Yes = 12.5%, No = 0%)*
a. Budget line item exists ...
%
b. Budget line item funded ...
%
2. Organizational chart and current job descriptions
(Yes = 12.5%, No = 0%)*
a. Organization chart exists .
%
b. Current job descriptions exist for all roles .... %
3. Formal training plan and schedule by cadre 14
(Yes = 12.5%, No = 0%)*
a. Formal training plan and schedule exist
%
b. Training plans offered for different roles .
%
Provision of Training (25%):
Percentage of staff receiving required annual training
This percentage is assigned proportionally according to the
percentage of staff receiving annually required training:
% of staff receiving training 25% ...
%
Total ..
%

Training components
+ Provision of training
= 100%

*Select Yes if the component is fully met; select No if the component is partially met or not met. This
will signal when follow-up action is required.
How to Use the Results
Results are below
target

Results meet target

Action: Identify the reasons why key components of the training

program are not in place. Identify and implement the actions that
need to take place to put a functional staff training program in
place.
Action: No action required. However, to ensure they meet the
current requirements of the procurement organization, the three
components should be reviewed on an annual basis, or when policy
changes are implemented.

Data Needed
Confirmation of budget line item and funding
for training
Organizational chart and job descriptions
Training plans and schedules
Number of staff trained annually

Data Sources
Procurement management records
Human resources records
Training logs

How to Illustrate the Results

Funded and Operational Procurement Staff Training Program is in Place
100%
75%
50%
25%
0%
Budget

line
Org chart
& job
Training
plan &
Provision
of training

100%
Total
Total
% of Staff Trained
Training for All Staff Roles Training Plan & Sched Exist Job Descriptions Exist Organization Chart Exists Budget Line Funded
item
descriptions schedule
Budget Line Exists

10. Transparent Price Information: Are Procurement Prices

Available to the Public?
This indicator measures the number of products purchased by the procurement unit, whose
Frequency: Annually
Formula

Target

Total number of prices publicly posted15

100
Total number of products purchased

100%

How to Use the Results

Results are below target

Action: Investigate the reasons for the limited

posting of product prices on the public website.
Identify any remedial actions that could be taken
to increase the number product prices posted on
the public website.

Results are at target

Action: No action needed.

Data Needed

Data Sources

List of items procured

URL for website where procurement
information is posted for the public

Purchase orders/contracts
Central files/database
Ministry website

How to Illustrate the Results

Percentage of Product Prices Posted on a Publicly Accessible Website
100%
75%
50%
25%
0%
Year 1
15

Year 2

Year 3

The total number of products with their purchase price posted on a publicly accessible website. Depending on the number of items

procured, this indicator may be limited to those priority and focus items identified in Indicator 1.

11. Transparent Tendering: Are Procurement Methods Being

Used that Promote Competition?

This indicator measures the total value of purchase orders and contracts issued on a compet
Frequency: Annually
Formula

Target

Total award value of each competitive method

100
Total annual value of awards

16

To be determined by procurement
unit based on historical
performance

Setting the Target

The procurement unit should review procurement records for the last one-to-three years to determine
baseline rates for using the following types of competitive procurement methods:
international competitive bidding
national competitive bidding
request for proposal/quotation.
The formula above can be used to calculate baseline rates for the percentage of the value of contract
awarded through each type of competitive method. The sum of the three percentages will indicate the
overall level of competition. The higher the percentage, the more the procurement unit is using comp
Note: Not every purchase warrants competitive bidding because of the additional cost of labor and ad
How to Use the Results
Results are below pre-determined
target

Action: Investigate the reasons for the limited use of

competition. Identify any remedial actions that could
be taken to increase the number and value of
competitive procurements.

Results are above pre-determined

target

Action: No action needed. Consider raising the target

level following two consecutive periods of results
above the target level.

16

Total value of contracts awarded through a competitive procurement method.

Data Needed
For a specific evaluation period (e.g., Jan.Dec.):
Contract documentation showing whether or not
competition was used
Total value of contracts issued for each competitive
method
Total value of all contracts issued

w to Illustrate the Results

Awarded through a Competitive Procurement Method
80%
60%
40%
20%

Data Sources
Contract master files
Central files/database
Procurement thresholds
Note: To ensure data for this
indicator
is easy to collect, there should be a
discipline and tracking method to
record whether or not competition
was conducted.

0%
68%
40%

65%
38%
19%

8%

8%

2011
ICB

2012
NCB

RFP/RFQ

Total

28

References

Aronovich, Dana, Marie Tien, Ethan Collins, Adriano Sommerlatte, and Linda Allain. 2010. Measurin
Chain Performance: Guide to Key Performance Indicators for Public Health Managers. Arlington, Va.
Chartered Institute of Purchasing and Supply (CIPS). Framework arrangements. Lincolnshire, UK: C
Dominick, Charles. June 2009. 10 Procurement KPI's, Part I & Part II. PurchTips - Edition # 180.
Available at http://www.nextlevelpurchasing.com/articles/procurement-kpi.html and http://www.nextl
Eichler, Rena, Alex Ergo, Brian Serumaga, James Rosen, Greg Miles, and Mavere Tukai. August 2012
Mlinga, R. S. 2008. Procurement Monitoring in the Tanzania Public Sector. Tanzania: Public Procure
Authority (PPRA).
PATH and World Health Organization. 2008. Harmonized Toolkit Performance Indicators. Seattle, Wa
PATH and World Health Organization. 2009. Procurement Capacity Toolkit: Tools and Resources for P
Reproductive Health Supplies. Seattle, Wash.: PATH.
USAID | DELIVER PROJECT, Task Order 4. 2012. Key Performance Indicators Strengthen Procureme
America. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 4.

Appendix A

Identifying and Creating a Basket

Some procurement performance indicators require the collection of data on the products tha
being procured. The procurement unit likely has the responsibility for hundreds, if not thous

How to Create a Basket of Focus Products

One method of creating a shorter list of focus products involves using the 80/20 rulethat 8

1. Make sure the product catalog data has item numbers, descriptions of products, unit pri
2. Import this data into a spreadsheet.

3. Create an extended value column that multiplies unit price by purchase quantity for each
4. Sort the entire spreadsheet by extended valuehighest to lowest.

5. Create a column to assign a number to the items as they are now sorted. Assign number

6. Create a column that calculates the cumulative percentage (%) of items. For example, in
100 items, the first seven items would be 7 percent of the total number of items.

7. Create a column that calculates the cumulative value of the items, from highest to lowes

8. Create a column that calculates the percentage (%) of the cumulative value. For example

9. Identify the top 20 percent of the total items. These should represent 80 percent or more

10. Look carefully at the items to make sure that they are a good representation of what the
procurement unit purchases. For instance, ensuring that vaccines, pharmaceuticals, hospital supplies, and diagnostics are all represented. If
products to the focus products list.

Focus Product List Example

Code
No.
173
405
12
242
414
296
170
450
256
406
407
261
162
428
24
165
102
222
336
118
454
426
110
856
53
98
234
249
224
430
318
20
202
779
987
482
210

Unit Of
Issue Item Description

Unit Price

1000
1000
Each
500g
1000
1000
100
Each
Each
1000ml
Each
1000
Each
100
12
Each
1000
Each
1000
Each
Each
100
Each
50
100
10
Each
1000
Each
100
1000
12
Each
200
25 runs
1000ML
Each

$16.33
$6.52
$0.90
$1.29
$6.10
$2.42
$0.98
$0.74
$0.74
$0.74
$0.74
$2.96
$2.50
$0.14
$3.99
$5.40
$11.26
$0.15
$56.02
$5.42
$1.10
$0.14
$5.42
$4,371.95
$30.68
$0.68
$0.27
$15.38
$0.15
$0.14
$1.92
$1.96
$0.40
$96.29
$325.00
$115.15
$0.11

Erythromycin 250mg
Co-trimoxazole tabs 480m
Depo-Provera
Cotton wool
Doxycycline Hyclate 100m
Paracetamol 500mg tabs
Gauze swabs 8 ply
Sodium chloride 0.9%
Sodium chloride 0.9%
Dextrose 5%
Dextrose 5%
Metronidazole tabs 200m
Gauze roll 90cmx40m
Gloves surgeon 7
POP 15cm by 2.7m
Gauze roll 90cmx100m
Chloramphenicol caps
Benzyl penicillin Injection
Praziquantel 600mg
Insulin Soluble*
Half-Strength Darrows
Gloves surgeon 6
Insulin zinc*
Cefriaxone
X-Ray Films 18X43
Bandage WOW 15cmx4m
Pethidine 2ml
Methyldopa 250m coated
Benzathine 2.4MGU
Gloves surgeon 8
Phenobarbitone 30mg
POP 7.5cm by2.7m
Adhesive tape 5cmx5m
Cuvettes
Facs count control kits
ABX Minilyse
Oxytocin 10 IU Injection

Purchase
Quantity
166,400
380,000
1,800,000
800,000
120,000
280,000
630,000
800,000
800,000
750,000
750,000
185,000
210,000
3,000,000
105,000
70,000
32,000
2,300,000
5,500
54,000
240,000
1,750,000
32,400
5,500
220,000
480,000
8,000
760,000
800,000
55,000
42,000
157,500

315,000

Extended
Value

$2,717,312
$2,477,600
$1,618,200
$1,032,000
$732,000
$677,600
$617,400
$592,000
$592,000
$555,000
$555,000
$547,600
$525,000
$420,000
$418,950
$378,000
$360,320
$345,000
$308,110
$292,410
$264,000
$245,000
$175,446
40 $174,878
$168,740
$149,600
$131,040
$123,040
$114,000
$112,000
$105,600
$82,320
$63,000
600 $57,776
120 $39,000
338 $38,920
$34,335

# of
Items

% of
Cumulative
Items**
Value

1 1%
2 1%
3 2%
4 2%
5 3%
6 3%
7 4%
8 4%
9 5%
10 6%
11 6%
12 7%
13 7%
14 8%
15 8%
16 9%
17 9%
18 10%
19 11%
20 11%
21 12%
22 12%
23 13%
24 13%
25 14%
26 14%
27 15%
28 16%
29 16%
30 17%
31 17%
32 18%
33 18%
34 19%
35 19%
36 20%
37 21%

$2,717,312
$5,194,912
$6,813,112
$7,845,112
$8,577,112
$9,254,712
$9,872,112
$10,464,112
$11,056,112
$11,611,112
$12,166,112
$12,713,712
$13,238,712
$13,658,712
$14,077,662
$14,455,662
$14,815,982
$15,160,982
$15,469,092
$15,761,502
$16,025,502
$16,270,502
$16,445,948
$16,620,826
$16,789,566
$16,939,166
$17,070,206
$17,193,246
$17,307,246
$17,419,246
$17,524,846
$17,607,166
$17,670,166
$17,727,942
$17,766,942
$17,805,863
$17,840,198

*80% of the total purchase value is captured by the top 17 items, representing only 9% of items purchased.
**The top 25 items (14% of items) were selected as the basket of focus items, capturing 90% of the total purchase value.

Appendix B

Using International Reference

Prices to Identify Price Variances

Evaluating the prices a procurement unit pays for pharmaceuticals, contraceptives, and med
supplies against international reference prices for such products is an important tool that pr
Management Sciences for Health (MSH) International Drug Price Indicator Guide
Website: http://erc.msh.org/priceguide
World Health Organization and Health Action International (WHO/HAI) Project on Medici
Prices and Availability
Website: http://www.haiweb.org/MedPriceDatabase
The Global Fund Price and Quality Reporting (PQR) Tool
Website: http://www.theglobalfund.org/en/procurement/pqr/
The International Drug Price Indicator Guide (the Guide) is the most commonly used referen
price guide; it provides an indication of prices for more than 1,100 items, focusing on essent
Following is an example of how to determine price variance using the Guide.

Procedure for Determining Price Variances from

International Reference Prices

1. Select a product from the list of focus products. Record the product name; for medicines
Amoxicillin, 250 mg, capsule, 1,000 per package, $16.12 per package, CIF

2. Access the guide at: http://erc.msh.org/priceguide.

3. Click on the Search the Guide heading.
4. Type in the product name in the search by name boxin this case, amoxicillinthen clic
5. A list of amoxicillin products will appear. Identify the product that matches the strength
dosage form of your product (250 mg, capsule-tablet).
6. Click on that product and a list of supplier prices and buyer prices will appear.
7. The supplier prices are from organizations (usually non-profit) experienced in delivering
8. Identify the median price for the supplier price list. For price comparison, the Guide reco
9. Compare price terms of products purchased with the Guide supplier price terms; adjust,
The purchasers payment terms are cost, insurance, and freight (CIF) so the cost of the prod
To adjust for this difference, the Guide recommends adding 10 to 15 percent to the supplier
10. Divide the purchasers unit price ($0.01612) by the guide median suppliers price ($0.018
adjusted for payment terms) to determine the price variance from international reference pr
$0.01612/$0.01881 = 0.857
A ratio less than 1 indicates that the purchaser is paying a price that is lower than the intern
It should be noted that factors, such as the number of units procured, number of shipments

The seller makes the goods available to the buyer at the sellers premises, e.g., works, factory, warehouse, plant. All charges and risk from
there on, such as delivery, distribution, commissions, etc., are to be borne by the buyer. For more information, see Incoterms Internation
Commercial Terms (http://www.iccwbo.org/incoterms).
17

Appendix C

Supplier Performance Scorecard

Supplier Name:
Contract Number:
Scorecard Month:

Scorecard Item
DELIVERY

Numerator
Denominator
Total Score %
# of on time shipments
Total # shipments

1. Percentage of shipments delivered on time

88
100
# of full shipments
Total # shipments
88
100
# with adequate documents
Total # shipments

2. Percentage of shipments fully delivered

3. Percentage of shipments that had adequate documents received

on time

QUALITY

95

100

88.0%
88.0%

95.0%

Numerator
Denominator
Total Score %
# of products with correct
pack size and quantity
Total # of products

4. Percentage of products with correct pack size and quantity

192
# of products undamaged

5. Percentage of products received undamaged due to adequate

packaging

194
# of products passed
QC testing

6. Percentage of products that passed quality control testing

198
# of products in compliance

7. Percentage of products that comply with shelf life requirements

CUSTOMER SERVICE
8. Percentage of invoices that comply with contract pricing and terms

188

200

96.0%

Total # of products
200

97.0%

Total # of products
200

99.0%

Total # of products
200

94.0%

Numerator
Denominator
Total Score %
# of correct invoices
Total # of invoices
97

Supplier Rating
38

100

97.0%

94.3%

Appendix D

Additional Resources
Key Performance Indicators Strengthen Procurement in Latin America
(http://deliver.jsi.com/)

This brief describes the evolution of contraceptive procurement in the Latin America and Ca
Measuring Supply Chain Performance: Guide to Key Performance Indicators for Pub
Health Managers
(http://deliver.jsi.com/)
A comprehensive guide to help managers and logisticians focus on key logistics areas that th
Performance-Based Incentives to Strengthen Public Health Supply Chains
(http://deliver.jsi.com/)
Performance-based incentives (PBIs) (also known as performance-based financing) could str
Procurement Capacity Toolkit: Tools and Resources for Procurement of Reproductiv
Health Supplies
(http://www.path.org/publications)
Developed by PATH and the World Health Organization (WHO), this comprehensive toolkit is
Procurement Performance Indicators Dashboard
http://deliver.jsi.com/dlvr_content/resources/allpubs/guidelines/ProcPerfIndiTemplate.xlsx
A Microsoft Excel-based tool that complements the Procurement Performance Indicators Gu
40

For more information, please visit deliver.jsi.com.

SAID I DELIVER PROJECT

John Snow, Inc.

16th Floor Arlington, VA 22209 USA Phone: 703-528-7474

Fax: 703-528-7480
Email: askdeliver@jsi.com
Internet: deliver.jsi.com

e Indicators

ors to Strengthen the Procurement Process for Public Hea

ent. It was prepared by the

o Strengthen the Procurement Process for Public Health Comm

he U.S. Agency for

r International
mber AID-OAA-TO-10now, Inc., in collaboration with
ment Institute; FHI 360;
c.; Pharmaceutical Healthcare Distributers (PHD); PRISMA; and VillageReach. The project improves essential

dicators GuideUsing Procurement Performance Indicators to Strengthen the Procurement Process for Public

nformation on how to implement and use them to monitor and improve procurement system performance.

............................................................. 1
............................................................. 3

.................................. 5
Used? ........................ 6
Procurement
................................................ 9
t Time?....................11
................................14
....................................17
t Stockouts? ........19
....................................21
des Staff with
..........................23
ic?...........................25
Competition? ....26
.............................................................29

................................................31
.............................................35
.....................................................37
........................................................39

................................................ 3
...................................................... 6

and central medical stores who are responsible for procuring public health commodities and who wa

mall set of performance indicators and information on how to implement and use the performance indi

he information they need to evaluate how well the system is functioning and to identify areas where a

awn from a larger body of performance indicators identified through a review of several publications a

cPerfIndiTemplate.xlsx.
in table 1.

m is an important first step, monitoring and recording data alone does not improve performance. Mon

additional resources can be found in appendix D.

Performance
Category
Cost

Cost

Quality

Quality
Timeliness
Timeliness

Timeliness

Systems
Productivity
Systems
Productivity
Systems
Productivity

Integrity

Performance
Category
Integrity

indicators identified in
setting an appropriate target level, and where to find the data needed to calculate the indicator.

s Paid for

ract unit price paid and the international reference unit price for focus products, over the annual spe

(=) 100%

e changes can be
ctices to achieve
for selected

d; however,
be monitored

ces

cts issued by
evaluated time

ndix B.

Items with prices higher than IRP

curement

purchases (purchase order, annual contract, and multi-year contract) to assess the procurement enti

et

performance to
rocurement unit

baseline percentages
y, multi-year contracts and annual contracts will have the largest percentages. A higher percentage of simple pu
h a target ratio of 100% because some products are not suitable for these contracts. For example, low-value item

ng the purchasing history.

ar

ries, multiple

erms of future dealings between them (e.g., volume, price, etc.), without committing to or guaranteeing a specific purchase.

ntify products
acts or multi-

purchases to
be considered for
s.
the 80/20
bidding

onducting an

needed to
work) contracts.

ions to ensure
his type of

e adapted for

ces to support
contract.

by the
time period

al annual spend is covered by 20%

efforts on those items that matter the most.

n analysis of the purchase history should take place annually.

nto the three general categories of contracts: purchase orders, annual contracts, and multi-year contr
la given above.
est percentage, followed by annual contracts and multi-year contracts. Over time, the percentage of p
ulti-year contracts, conduct an 80/20 analysis of annual purchases. In the top 80 percent of the value
priority purchases to more
ontract or multi-year contract utilization (including framework contracts), the more likely the benefit

y the procurement unit that expired before use. This indicator may also be expressed as a percentage

o be adapted to measure the annual value and percentage of donated products that expire before use

et

ay be difficult to achieve,
entory management unit should review historical information on annual product expiration values and establish

ant to identify the root cause of product expiration.

entify the root
of the product. If
ds with a short
hould be shared
ply with good
World Health

ment units to
ance and to
urement

es

acts issued by
aluated time

t as % of Total
s Purchased by

r3

g the Right

performance criteria identified in the purchase order or contract. By monitoring and documenting su

orders for each supplier that met the product and performance criteria identified in the purchase orde

r each supplier were received on time, according to the contract delivery schedule, whether the corre

ents. The monthly data

given month, quarter,

get

0%

0%

liers may not be

erformance and establish a baseline target rate for the suppliers performance. This rate should be set at a leve

the supplier with

mentation
o be useful and
on a routine

r to acknowledge
continued
y and service.

s issued by
period evaluated

eived voucher

mance

mpliance. The criteria should be drawn from the purchase order or contract because that document

at the warehouse, such as a

el must coordinate with warehouse receiving personnel and quality assurance/regulatory personnel to
and record findings on a supplier performance scorecard. See appendix C for an example of a supplie
mine the number of units accepted that meet all product criteria defined in the purchase order or con

ce. This criteria should be drawn from the purchase order/contract and can include

dule to identify the required

n warehouse; however, this may vary according to country or the procuring entity.
fies the dates the products were received.
very dates stated in the purchase order/contract and record the findings on a supplier performance sc

mine the number of orders delivered that meet the criteria defined in the purchase order or contract.

s in the

d the percentage of procurements that were completed within a standard procurement cycle time gui

ers using historical data. It measures the number of days required to complete the procurement cycle

in monthly or
handled by the

rget

00%

easure the number of

wing the procurements completed during the last 12 months. The procurement cycle time guidelines can be set

and identify at
he delay
rsonnel
the cause of
s to prevent

knowledge the
courage
on, approval,
contracts.

s
contract

committee

uidelines

standard procurement process from the submission of the requisition for approval to the contract or
nt records for the previous 12 months and record the key dates. Determine the number of days requir

ss), review procurement records for the last three years and calculate cycle times using the same me
1 can be used as the standard guideline. However, the average days for each stage in the cycle shou
number of days between requisition submission and approval is found to be very high, the standard g
e improvement target. Setting the standard guidelines should be a consultative process with the dep

Difference
(days)

made within the payment period called for in the contract. By paying suppliers on time, procurement

al target for on-time

this target. In these cases, a historical baseline for payment performance must be established first. To establish
paid on time; this will act as an incentive for the accounts payable department to improve performance and en

ne the cause for

k, delays in
appropriate
umber of late
encourage

owledge the
ge continued

fy payment

ifies date

that are issued as emergency orders, out of the total purchase orders or contracts placed during a de

ment unit
nce

ment unit
nce

or the percentage value

rders placed. A low percentage indicates that the procurement unit is issuing few emergency orders; which, gen
ontinuous improvement.

purchase
planning,

where
ergency orders

ents to
d to
t practices.

y order will be considered to be

perating

ds against the total value of goods purchased within a designated period of time; i.e., how much it cos

ent unit based

ent unit based

lish a baseline value for

t operation is in implementing procurement. However, caution should be taken so as not to set a target that is t

gate why the

ciencies to
e of
and effective

adjusted
ved. Changes
ement unit

ies cost. Allocated procurement

or costs)

r contract)

ng Program
ining to

e and whether the program is providing annual training to staff to improve their procurement skills.

to guide staff development

or each cadre

ning is provided to all levels

get

omponents
n of training
00%

met or not met. This

the training
actions that
rogram in

meet the
n, the three
or when policy

records

ists Budget Line Funded

ent Prices

rement unit, whose purchase price is posted on a publicly accessible website. The higher the percent

or the limited
ublic website.
could be taken
rices posted on

n the number of items

hods Being
issued on a competitive basis against the total value of purchase orders and contracts issued within

et

y procurement
ical

ee years to determine

the value of contracts

ntages will indicate the
ent unit is using competitive procurement methods, which increases the likelihood of program savings through c
al cost of labor and advertising. Most organizations have a threshold policy that dictates the value of products th

limited use of
ons that could
alue of

sing the target

of results

es
ase
holds
for this

re should be a
g method to
t competition

llain. 2010. Measuring Supply

nagers. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 1.
s. Lincolnshire, UK: CIPS Available at http://www.cips.org/Documents/Resources/Knowledge%20Summary/Fra
Tips - Edition # 180.
and http://www.nextlevelpurchasing.com/articles/procurement-key-performance-indicators.html (accessed Ma
re Tukai. August 2012. Options Guide: Performance-Based Incentives to Strengthen Public Health Supply Cha
zania: Public Procurement Regulatory

ndicators. Seattle, Wash.: PATH. (unpublished)

ls and Resources for Procurement of

trengthen Procurement in Latin

a Basket of Focus Products

on the products that are

undreds, if not thousands, of product line items. Tracking performance on each and every item would

e 80/20 rulethat 80 percent of expenditures are generated by 20 percent of the products procured.

of products, unit prices, and annual purchase quantity prior to performing the analysis.

ase quantity for each item in the catalog.

ted. Assign number 1 to the highest value item, 2 to the second highest, 3 to the third highest, and so

ms. For example, in a list of

om highest to lowest. The cumulative value adds the extended values down the list.

e value. For example, if the first three line items total $120,000 and the total value is $1,000,000 the

t 80 percent or more of the total value. If not, continue down the list until the items capture 80 percen

gnostics are all represented. If needed, consider adding a few of the missing

Cumulative
Value
$2,717,312
$5,194,912
$6,813,112
$7,845,112
$8,577,112
$9,254,712
$9,872,112
$10,464,112
$11,056,112
$11,611,112
$12,166,112
$12,713,712
$13,238,712
$13,658,712
$14,077,662
$14,455,662
$14,815,982
$15,160,982
$15,469,092
$15,761,502
$16,025,502
$16,270,502
$16,445,948
$16,620,826
$16,789,566
$16,939,166
$17,070,206
$17,193,246
$17,307,246
$17,419,246
$17,524,846
$17,607,166
$17,670,166
$17,727,942
$17,766,942
$17,805,863
$17,840,198

% of
Total
Value*
15%
28%
37%
42%
46%
50%
53%
56%
60%
63%
66%
68%
71%
74%
76%
78%
80%
82%
83%
85%
86%
88%
89%
90%
90%
91%
92%
93%
93%
94%
94%
95%
95%
95%
96%
96%
96%

ence
riances

raceptives, and medical

mportant tool that procurement managers can use to help their department improve efforts to procure
icator Guide

I) Project on Medicine

mmonly used reference

, focusing on essential products on the international market for selected pharmaceuticals, contracep

name; for medicines, the strength of the medicine, unit of measure (dosage form for medicines), num

moxicillinthen click search now.

atches the strength and

ill appear.
ienced in delivering medicines to the developing world. The buyer prices are usually from governmen
rison, the Guide recommends using the median price as a reference price rather than the mean or av
price terms; adjust, as needed.
the cost of the product includes shipping and insurance. The supplier terms in the Guide are primari
cent to the supplier price as an estimate to allow for shipping and insurance costs and to make a mor
ppliers price ($0.01881
ational reference prices.

ower than the international median reference price.

umber of shipments requested, and other factors, can impact product price; this indicator is used as a

plant. All charges and risk from

see Incoterms International

recard

88.0%
88.0%

95.0%

96.0%

97.0%

99.0%

94.0%

%
97.0%

94.3%

atin America and Caribbean region to highlight the importance of monitoring and evaluating key data
Indicators for Public

ogistics areas that they want to improve, including procurement, and to provide them with a selection
y Chains

financing) could strengthen supply chains by linking performance to rewards. PBIs aim to motivate t
ent of Reproductive

prehensive toolkit is focused on strengthening the capacity of the personnel responsible for public-se

ndiTemplate.xlsx
mance Indicators Guide, to capture performance data and graphically summarize the results in a conc

Public Health Commodities

Health Commodities

t improves essential health commodity supply chains by strengthening logistics management information syste

nt Process for Public Health Commodities. Arlington, Va.: USAID | DELIVER PROJECT, Task Order 4.

m performance.

odities and who want to improve the performance of the procurement system. This is intended to ensu

e performance indicators to monitor and improve procurement system performance.

ntify areas where additional measures may be required to improve the overall procurement performan

veral publications and documents on the use of performance indicators. These indicators were selecte

performance. Monitoring should be accompanied by an evaluation of the data and findings to identify

the indicator.

ver the annual spend period.

procurement entitys use of efficient contracting mechanisms. The use of annual contracts and multi

centage of simple purchase orders (without underlying contracts) indicates that less efficient procurement mec
ample, low-value items, offered from multiple suppliers, and which are only purchased intermittently, would not

nd multi-year contracts.

the percentage of purchase orders should decrease, thereby minimizing the use of the less efficient p
rcent of the value of items, which items were purchased under purchase orders rather than under a c

e likely the benefits and cost savings of these contracting mechanisms will be realized.

ed as a percentage of total value.

t expire before use. To do so, limit the calculations to the values of the donated products, rather than

values and establish a relevant target value for annual product expiration. This value should be set at a level th

d documenting supplier performance, procurement personnel are in a stronger position to require co

n the purchase order or contract.

whether the correct quantity was received (shipment was fully delivered), and whether the correct s

ould be set at a level above the current performance level so that it raises the suppliers performance expectati

se that document legally binds the supplier to the performance criteria. This criteria can include

latory personnel to obtain the required documents needed to validate the shipment information.
xample of a supplier performance scorecard.
chase order or contract.

ier performance scorecard. See appendix C for an example of a supplier performance scorecard.

order or contract.

ment cycle time guideline.

procurement cycle, beginning with the date a requisition is submitted until the date the contract or t

uidelines can be set according to this, and future procurement performance will be measured against it. See No

to the contract or purchase order issue; and identify the key transactions that occur during this perio
mber of days required to complete each transaction stage identified and the average number of days f

using the same method described above.

e in the cycle should also be
igh, the standard guideline for this
ocess with the departments/units that carry out the particular function.

time, procurement units can better plan and control spending, and they may be able to negotiate mor

ed first. To establish a baseline, the procurement unit should review the number of supplier invoices that were p
performance and ensure more supplier invoices are paid on time. The target rate should be increased appropria

placed during a defined period of time. This indicator can be expressed as a percentage of the value

cy orders; which, generally, do not achieve the best value for the money. Target rates should be set somewhere

e., how much it costs the procurement unit to process U.S.$1.00 worth of orders. The cost of procurem

set a target that is too low and unrealistic, because reducing procurement resources too much could jeopardize

rocurement skills.

higher the percentage of product prices available to the public, the greater the opportunity for public

acts issued within a designated period of time. Measuring the percentage of contracts awarded throu

m savings through competitively priced products. The target rate should be set at a level higher than the basel
e value of products that should be purchased using a competitive bidding process.

ge%20Summary/Framework%20Arrangements.pdf (accessed September 6, 2012)

rs.html (accessed March 2011)

c Health Supply Chains Version 1. Bethesda, Md.: Health Systems 20/20 project, Abt Associates Inc.

every item would be too cumbersome for the procurement unit. The use of a smaller basket of goods

roducts procured. The ideal way to develop a list of focus products is to put the products into a sorta

hird highest, and so on.

is $1,000,000 the percentage of cumulative value of the first three line items is 12 percent of the tota

s capture 80 percent of the total value. In some cases, a percentage of items lower than 20 percent ca

e efforts to procure quality products at the lowest possible price. In making these comparisons, it is im

uticals, contraceptives, diagnostic tests, and medical supplies.

r medicines), number of units per package, price paid, and payment terms. For example

ly from government organizations that conducted international competitive bidding to obtain the pro
an the mean or average price. For amoxicillin, 250 mg capsules-tablets, the median unit price is $0.0

Guide are primarily ex works 17 and do not include shipping and insurance.
and to make a more appropriate price comparison. For amoxicillin, adding an additional 10 percent w

dicator is used as a general guide to assess procurement effectiveness in obtaining competitive prices

evaluating key data to improve performance, over time. Ultimately, these procurement improvements

em with a selection of metrics to monitor performance.

s aim to motivate the people and teams that comprise a supply chain to perform their function well to

nsible for public-sector procurement of contraceptives and reproductive health supplies.

he results in a concise dashboard format.

ement information systems, streamlining distribution systems, identifying financial resources for procurement

Task Order 4.

his is intended to ensure that these commodities are provided to programs in a timely manner that su

rocurement performance. To effectively monitor procurement performance, appropriate performance

ndicators were selected based on their ability to provide procurement managers key performance inf

nd findings to identify the systems strengths and weaknesses, which is then followed by developing

al contracts and multi-year contracts has been shown to provide procuring entities with cost savings

fficient procurement mechanisms are being used for most purchases. Target rates for multi-year contracts and an
ntermittently, would not warrant the additional effort required to purchase them under a multi-year contract;, g

e of the less efficient purchase types (purchase orders) in favor of more efficient types (annual contrac
rather than under a contract? Identify all these items, as well as other priority items that could be co

products, rather than calculating the values of all products procured.

hould be set at a level that is below the identified historical expiration value levels so that it provides an incentiv

position to require corrective action from suppliers when they are not in compliance with order/cont

whether the correct shipping documents were received on time.

s performance expectations and encourages a process of continuous improvement. The target level should be r

iteria can include

ment information.

mance scorecard.

date the contract or the purchase order is issued to the selected vendor.

asured against it. See Notes at the end of this section for information on establishing time guidelines.

occur during this period, such as requisition approved, bidding process initiated, bidding process clos
rage number of days for all transactions during the 12- month period. Total the average days for each

able to negotiate more favorable price agreements or payment terms.

plier invoices that were paid on time and compare that to the total number of supplier invoices paid within the d
d be increased appropriately as performance improvements in payment processing time are achieved, aiming to

rcentage of the value of orders or of the number of orders.

ould be set somewhere below the current

s. The cost of procurement can also be measured against the total number of orders processed during

o much could jeopardize the ability of the procurement unit to provide quality procurement services. The target

opportunity for public scrutiny of procurement results, which can create a broader base of public-sec

ntracts awarded through a competitive process helps the procurement unit keep track of the effectiv

el higher than the baseline rate to create an incentive for increased use of competitive procurement methods. T

Associates Inc.

maller basket of goods that represents a good percentage of the annual spend is an acceptable appro

products into a sortable spreadsheet, for example a Microsoft Excel spreadsheet, using the following

12 percent of the total spend (120,000/1,000,000).

wer than 20 percent captures a larger percentage of the annual value. In those cases, pick a range tha

se comparisons, it is important to identify and use international reference prices that are as compara

example

ding to obtain the product. The Guide recommends using the Supplier prices for comparison purpose
dian unit price is $0.0171 per capsule-tablet.

dditional 10 percent would bring the median unit price to $0.01881 per capsule-tablet.

ing competitive prices.

rement improvements have helped ensure a more continuous supply of contraceptives for the men an

m their function well to achieve specific targets.

supplies.

ources for procurement and supply chain operation, and enhancing forecasting and procurement planning. Th

timely manner that supports program objectives.

propriate performance monitoring indicators must be in place and they must be supported by both ma

s key performance information on different aspects of a procurement system, including cost, quality,

llowed by developing a plan for addressing the identified weaknesses. It is the active step of moving f

ties with cost savings through better product pricing from suppliers, economies of scale achieved by

lti-year contracts and annual contracts should be set at a level above the current baseline to create an incentiv
a multi-year contract;, given the low purchase value, infrequent need, and competitive marketplace for

types (annual contracts and multi-year contracts).

items that could be considered for purchase under a contract. See appendix A for guidance on condu

at it provides an incentive for the supply units (planning/ procurement/inventory management) to engage in a p

liance with order/contract requirements. Supplier performance monitoring also provides historical in

target level should be raised appropriately as performance improves, aiming to achieve 100% over time.

me guidelines.

d, bidding process closed, etc. See the Procurement Cycle Time Monitoring Worksheet example below
average days for each stage; this becomes the average procurement

nvoices paid within the designated time period. Then, the target
are achieved, aiming to achieve 100% over time.

ders processed during the designated period; this number would be the average cost to process one

ent services. The target should be periodically reviewed and adjusted to reflect changes in the procurement uni

ader base of public-sector accountability against which the procurement unit performs its purchasing

p track of the effective level of competition it is achieving.

procurement methods. The target level should be monitored and periodically adjusted to reflect changes in the

s an acceptable approach for measuring performance.

et, using the following steps:

cases, pick a range that seems reasonable. In the example below, focusing data collection on the top 2

s that are as comparable as possible to the product purchased and are updated on an annual basis. S

r comparison purposes. Buyer prices should not be used as international reference prices because th

eptives for the men and women that need them, and they have saved government resources that could

ocurement planning. The project encourages policymakers and donors to support logistics as a critical factor i

supported by both management and operational personnel.

ncluding cost, quality, timeliness of processes, system productivity, and system integrity. They are des

active step of moving from performance measurement to performance management that ensures a co

s of scale achieved by a more efficient procurement process (fewer bidding exercises), and fewer cont

ne to create an incentive to increase their use, while minimizing ad hoc purchasing if no contract is in place.
marketplace for

for guidance on conducting an 80/20 analysis of purchased products.

ement) to engage in a process of continuous improvement to review and improve practices. Over time, the targ

provides historical information to help inform the supplier evaluation and selection process for futur

e 100% over time.

ksheet example below for a list of transactions to consider.

e cost to process one order.

in the procurement unit structure and purchase volumes.

rforms its purchasing activities. Greater public scrutiny and accountability can create additional ince

o reflect changes in the use of competitive methods.

collection on the top 25 items was only 13.9 percent of the total items, but captured 90.4 percent of t

on an annual basis. Sources for international reference prices include

nce prices because they may only be available to the organization that conducted the tender or procu

nt resources that could then be invested in other parts of the supply chain or health programs.

tics as a critical factor in the overall success of their healthcare mandates.

ntegrity. They are designed to provide timely, relevant, and concise information for procurement man

ment that ensures a continuously improving procurement process that will effectively support health c

cises), and fewer contracts and suppliers to manage. The overall goal is to create a culture and proce

o contract is in place.

ices. Over time, the target should be reduced as the product expiration values decrease.

ction process for future tenders.

create additional incentive for procurement units to perform their functions in an open, transparent,

ured 90.4 percent of the total value.

ed the tender or procurement.

alth programs.

for procurement managers to use to assess progress in achieving pre-established procurement perfo

tively support health care program supply needs.

te a culture and process where the periodic review of purchased commodities is conducted to evalua

an open, transparent, and effective manner.

hed procurement performance goals and targets. This document is complemented by a Microsoft Exce

s conducted to evaluate opportunities for improving purchasing through more efficient contract utiliz

ed by a Microsoft Excel spreadsheet that captures performance data and graphically summarizes resu

efficient contract utilization.

ically summarizes results for each indicator in a dashboard format. The Procurement Performance In

ement Performance Indicators Dashboard can be found on the USAID | DELIVER PROJECT website

R PROJECT website