Making Procurement Performance Count – Part 2: Resolving Procurement Woes

Making Procurement Performance Count – Part 1: Evolution of Procurement
February 26, 2013
Making Procurement Performance Count – Part 3: Streamlining the Procurement Process
March 4, 2013
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In the previous blog we discussed the evolution of procurement from a clerical purchasing function to a strategic growth partner. We also shed light on the growing importance of procurement and the need to track and measure procurement performance and align it with organizational objectives.

In this post we will discuss what measures can be adopted to keep track of your procurement performance.

Till the trade was simple, supply chain mostly restricted to a particular geography, product/service options to customers fewer and the customer base confined, managing procurement function was relatively simple. However, with trade liberalization, advent of technology and easy availability of information the boundaries have dissolved and world has started becoming flat.

This has translated into wider customer base, more options to customers, more competition and thus longer and complex supply chain. Procurement has to be dealt with a new approach which allows better visibility into organization’s spending. This is where technology can be leveraged, to not only improve procurement performance but to also monitor performance and track the savings it generates to financial statements of the organization.

Measuring and tracking procurement performance in an evolved way would help the organization with

  • Tracking procurement savings
  • Creating transparency in maintaining and comparing forecasted and actual savings
  • Gain visibility into procurement savings obtained from supplier negotiations
  • Overcoming disconnect with finance division over savings definition
  • Show procurement’s impact on the company’s top line.

Organizations can ensure following measures to have a better procurement performance tracking system in place;

  • Develop a function-specific view into individual projects and associated savings.
  • Establish a common savings definition and baseline agreed upon by finance and procurement
  • Map the impact of procurement savings by collaborating with the finance team
  • Streamline savings approval process thus ensuring the right information reaches the right authority
  • Track savings at a multi-dimensional  level
  • Map forecasted savings to budgets

In the coming two blog posts we will discuss the process, enabled by technology to map procurement performance.

For further reading, click on the download button to access the whitepaper – “Making Procurement Performance Count”

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