Chapter 2.2

Question 1

What is the purpose of KPIs

Answer 1

To measure how well the contract is performing in delivering the 5 rights

Question 2

Name 3 examples of contract specific KPIs

Answer 2

1. Number of payments made within terms
2. Timeliness of orders
3. Accuracy and completeness of orders

Question 3

What 3 things should each KPI do?

Answer 3

1. Be important
2. Relate to a potential improvement or a potential problem
3. Fall within the authority or ability of the parties to influence the results

Question 4

Should it be necessary to have more than 5 or 6 KPIs?

Answer 4

No

Question 5

Whats a rule regarding KPIs

Answer 5

The costs of capturing and analysing the KPI information must never exceed the potential benefits from improvement or likely costs of the potential problems occuring

Question 6

Name the 3 main types of data used in KPIs

Answer 6

1. Binary measures
2. Numerical measures
3. Qualitative or subjective assessments

Question 7

What are binary measures

Answer 7

Where only one of the two options is possible

Question 8

What are numerical measures

Answer 8

Where a range of solutions is possible

Question 9

What are qualitative or subjective assessments

Answer 9

Pure opinions about how well or otherwise the goods are performing or the service is being delivered

Question 10

What are KPIs dependent on?

Answer 10

The availability of the relevant data

Question 11

Name 3 considerations when defining KPI data

Answer 11

1. What data do you need?
2. Where is the data held?
3. Are there costs associated with collecting the data?

Question 12

Name 2 things KPI data must be

Answer 12

1. Easily accessible
2. Capable of being trusted by both parties

Question 13

What is a common method of converting KPI measures into performance scores?

Answer 13

To use a 0 to 4 scale

Question 14

When are setting KPI targets essential?

Answer 14

If incentive payments are to be used

Question 15

What must any target used be?

Answer 15

1. Specific
2. Measurable
3. Achievable
4. Realistic
5. Timebound

Question 16

name 3 other considerations (not SMART) to bear in mind when setting targets

Answer 16

1. What value will an improvement of a particular KPI deliver to the business?
2. What will it cost to deliver the improvement and who will bear the cost
3. Are there likely to be any unintended consequences

Question 17

Name the 5 steps to defining KPIs

Answer 17

1. Decide what matters: what are you going to measure
2. How are you going to measure it
3. Who is going to measure it
4. How often or over what time period will it be measured?
5. How does the measure convert to a score

Question 18

What are KPIs

Answer 18

Measures of the outputs of activity

Question 19

Why are targets set for KPIs

Answer 19

To drive performance levels to improve above the baseline required by the specification

Question 20

What can be used to compensate the purchaser if targets are not met

Answer 20

Penalty clauses or service credits

Question 21

Where might detail of how KPIs will be monitored and the actions or consequences resulting from scores achieved be documented and agreed?

Answer 21

Service level agreement

Question 22

Service level agreement (SLA)

Answer 22

Document outlining the expected minimum level of service between a service provider and a client. It clarifies the scope of the service, responsibilities of each party and how to escalate among other factors. A service level agreement is legally enforceable if it is referred to in a contract

Question 23

Do service level agreements mean different things to different people?

Answer 23

Yes

Question 24

Name 4 different things service level agreements can mean

Answer 24

1. It can refer to a non-contractual agreement between different divisions or departments within a single organisation
2. It can also refer to a single document within a suite of documents that make up a contract
3. It is often incorrectly used to mean the entire contract
4. In some circumstances it may be a side-agreement which is not part of the contract itself but which is still intended to be legally binding

Question 25

What is always the nature of an SLA

Answer 25

An agreement between the provider of a service and the recipient of that service, setting out the quality standards of various aspects of the service, actions to be taken if those standards are not achieved, the consequences if such actions do not resolve the problem, and (where applicable) the consequences of such standards being exceeded

Question 26

Can suppliers have standard SLAs in respect of their product?

Answer 26

Yes

Question 27

Should purchasers seek to avoid accepting supplier-drafted SLAs?

Answer 27

Yes

Question 28

What does an SLA closely resemble?

Answer 28

A specification

Question 29

Name the 7 core elements of SLAs

Answer 29

1. Service definition 2. Quality definition 3. KPI details 4. KPI management response 5. Operational performance 6. Operational performance management response 7. Constraints or mitigating factors

Question 30

What 5 things should the quality definition cover?

Answer 30

1. Mandatory minimum standards, failure to reach which is a breach of contract 2.Unacceptable standards, which may not be immediately considered a breach of contract, but could become a breach if not rectified within stated timescales 3. Poor standards, which ,ay not ever be serious enough to become a breach of contract, but which warrant compensation by way of penalty payments or service credits 4. Acceptable/ required standards as per the specification 5. Good (and, if thought necessary, excellent) standards which exceed the specification

Question 31

What 6 key things should be covered when setting out the full details of the KPIs

Answer 31

1. What is measured 2. How it is measured 3. Who measures it 4. How often it is measured 5. How measures convert into scores 6. Targets

Question 32

What 2 things should KPI management response cover?

Answer 32

1. Actions and consequences if the targets are not reached 2. Consequences (if any) if targets are exceeded

Question 33

Name 3 things the operational performance management response should cover

Answer 33

1. A 'first response' action and a timescale for resolution 2. An escalation procedure to be implemented if the first response is not carried out or is unsuccessful 3. A threshold at which non-KPI operational failures become potential breach of contract issues and how these will be managed - whether by referral to mediation, arbitration or through the courts

Question 34

Are internal SLAs usually intended to be legally binding?

Answer 34

No

Question 35

What 10 things should the agreement clearly state if the SLA is the only document setting out the requirements (it is in effect the contract)

Answer 35

1. KPIs: how they are to be measured, who measures them and how often 2. How the measures convert into scores 3. Any other service level standards, which may be of lesser importance than the KPIs 4. Minimum acceptable standards or scores in each case 5. Range of scores both above and below the minimum acceptable 6. Any mitigating factors which might apply in the event of poor performance 7. Any time period permitted in which to remedy a situation of poor performance 8. Remedies available to the injured party if the situation is not remedied 9. Process to be followed in order to access the remedies 10. How any inconsistencies or conflicts between the KPIs and any standards referred to are to be dealt with

Question 36

Alternative dispute resolution (ADR)

Answer 36

Any method of resolving a dispute between two parties which does not involve court action, including escalation to higher levels of authority, mediation, adjudication and arbitration. ADR may include negotiation, mediation, reconciliation, arbitration and then litigation

Question 37

Deed

Answer 37

A deed is usually an agreement for the transfer of an asset, for example land. It differs from a contract in that there may not be a requirement for any consideration

Question 38

What should happen if the SLA is the only form of agreement there is and does not include reference to consideration

Answer 38

The agreement must be executed as a deed in order to be legally binding

Question 39

What 3 things may an SLA also be called?

Answer 39

1. Performance management framework 2. Schedule to the contract 3. Appendix to the contract

Question 40

What 2 situations may stand-alone agreements in respect of a separate contract occur?

Answer 40

1. Where, for reasons of urgency, a contract has been put in place prior to full KPIs being established and agreed 2. Where there are a number of separate contracts and a single SLA is needed to ensure consistency of approach

Question 41

What will need to happen if the SLA is created after the main contract in order to be legally enforceable?

Answer 41

It will require additional consideration or execution as a deed

Question 42

Should KPIs and SLAs be reviewed regularly?

Answer 42

Yes

Question 43

Where should the KPI/SLA review programme be set out?

Answer 43

In the original quotation/tender request and firmly embedded within the contract documents

Question 44

Name 5 activities that can be carried out to measure delivery compliance KPIs

Answer 44

1. Delivery on time in full (OTIF) 2. Delivery on time 3. Average lead time 4. Average time to fill emergency orders 5. Consignment stock availability

Question 45

Name 6 activities that can be carried out to measure product/service quality

Answer 45

1. Product/service compliance 2. Reliability/durability 3. Usability/user satisfaction 4. Technical support 5. Supplier response time 6. Repair lead time

Question 46

Name 6 activities that can be carried out to measure health and safety

Answer 46

1. Endangering health and safety 2. Number of credit notes per month 3. Invoice preparation 4. Provision of quotations 5. Documentation 6. Management information

Question 47

Name 8 activities that can be carried out to measure best practise and continuous improvement

Answer 47

1. Supplier innovation 2. List of targeted value-added activties 3. Value-added activities 4. Proactivity 5. Responsiveness 6. Responsive to change/flexibility 7. Openness and cooperation 8. Understanding of accountabilities and responsibilities

Question 48

Name 4 activities that can be carried out to measure contact centre/call centre service measures

Answer 48

1. Abandonment rate 2. Average speed to answer 3. Time service factor 4. First time resolution

Question 49

Name 3 activities that can be carried out to measure cost management

Answer 49

1. Savings 2. Cost avoidance 3. Transaction cost reduction