Issue - May, 2006

Metrics for services

"I work in the supply management deptartment at a Canadian pharmaceutical company. I'm responsible for the procurement of outsourced services and the negotiation and management of such contracts.
In the March issue I read with interest your article entitled "Measuring Up--How leading companies handle supplier metrics." We are starting to implement metrics with some of our suppliers. An area we are struggling with is how to put in place performance metrics for service providers, in areas such as food service, security and cleaning.
This is definitely an area of challenge because often, they can't be rated on "hard" criteria such as on-time delivery, number of deviations, etc. It's often the soft skills and intangibles that we need to measure...but struggle with how?"
--Name and company withheld.

Editor's note
In addition to the above letter, another reader asked if we know of any good scorecards. We took both questions to Philip Townsend, performance improvement leader with PricewaterhouseCoopers (Toronto), who was quoted in the original article.
Townsend suggests several web sources for scorecard templates, but emphasizes the templates must be tailored to the specific organization in order to be effective. The web sites include:
• http://www.bettermanagement.com
• http://www.globalbestpractices.com
• http://www.performanceportal.org
• http://www.bscol.com
• http://www.supply-chain.org
In terms of metrics for services, Townsend suggests gathering feedback from the users of the services. "For example, if you've outsourced your help centre you might have measurements about responsiveness and quality of response, and user satisfaction levels."
He refers to the IT sector as a good example of a services field with established metrics. The IT industry has a framework called ITIL, which stands for the Information Technology Infrastructure Library (ITIL). "Within that framework there are a number of performance metrics that are very specific to the IT area," Townsend says. For more information on ITIL, see http://www.itil.co.uk