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Measuring your procurement performance

It is a widely accepted fact that procurement performance measurement has historically been inadequate. The focus has traditionally been on factors such as cost involved rather than increased efficiency or improved effectiveness. This has led to an inability to demonstrate the value that procurement captures and adds to an organization.

Back in the late 1980s, when the seeds for today’s strategic procurement transformation were just being planted, there was a great deal of discussion among procurement leaders about the urgent need for a new breed of procurement performance metrics. At that time, the two primary metrics for measuring procurement performance were purchase price variance (PPV) which was measured as price paid in recent period compared to prior period and the cost involved to issue a purchase order.

Subsequent decades brought an explosion of procurement information and automation technology, which enabled steady improvements in the art and science of procurement and supplier performance management. In today’s times improving the measurement of procurement performance has become of the key areas of interest for any procurement organization.

Procurement excellence is increasingly becoming an imperative factor in delivering efficient operations within successful companies. On the surface, effectively measuring procurement performance is no rocket science. However as we dig deeper, adequate measurement of procurement success is an issue of immense magnitude, as bottom-up reported savings can significantly deviate from the key financial figures a CFO looks at.

Procurement has come a long way since the last two decades. With big data & technology automation changing the game, how far should procurement go? What do mature procurement teams do in order to stay in the field?

To find out answers to such trivial but consequential questions, Zycus conducted an in-depth study. Based on this study Zycus’ new research report, Procurement Performance Management comes of age”, discusses how procurement professionals can shape their own ideas, innovations and elevate the function up and also have a deeper insight about the following topics-

  • Improvements and integration\’s in procurement information systems
  • Hurdles for procurement performance measurement
  • Expected vs realized KPI’s
  • Latest Procurement performance measurement metrics
  • Better ways to measure supplier performance
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