Procurement Performance: 6 Reasons You Should Measure Procurement Performance

Measuring procurement performance is a great way to demonstrate the value you add. This is because well-constructed performance measures allow you and others to judge whether or not you are achieving your goals, get back on track when performance drops, and set a new direction when you’ve met your goals.

Here are six specific reasons why you should measure your procurement performance.

1. Achieve your goals. Goals are achieved by first knowing where you are and then deciding where you want to be. Performance measures are the key to knowing where you currently are and then setting a new and better direction. For example, if your goal is to have the best prices in your industry, then a performance measure that evaluates the price you pay will tell you when you have achieved it. Once you’ve achieved that goal, your next goal might be to work with suppliers to lower costs so that prices can be lowered even further.

2. Improve performance. There is an old saying that “what gets measured gets done”. You can improve performance by using metrics to set a goal and then measure whether you are achieving that goal. If not, you can take appropriate action. If you’ve reached your goal, you can “raise the bar” and set a new goal that challenges your current level of performance. Either way, performance improves.

3. Opportunities to learn and grow. If your performance measures show that you are not meeting some of your goals, then it gives you an opportunity to do your research and find out why. The reasons you discover may, in turn, point in the direction of new knowledge you need to acquire or new skills you need to acquire. By doing this, your learning will have helped you grow as a person and as a procurement professional.

4. Broken processes. A procurement process is a combination of tasks and decisions necessary to carry out a procurement activity. An example of a process is “pay a vendor”. These processes must be linked to your. If the performance measures you use for these processes are not achieving your objectives, then it could be an indicator that the processes are not working. In turn, this will tell you that your goals are not being met, and therefore where and how to take corrective action.

5. Influence behavior. Performance measures can be a powerful way to motivate people to change unwanted behaviors. For example, if you measure contract compliance (that is, what proportion of money spent with suppliers is covered by a contract), you will be able to identify those who are not following your procurement rules and therefore could be costing money to Her organization.

6. Communicate your value. It is not enough to tell other members of your organization that the work you do is valuable. You need to be able to prove it, and performance measures are a great way to do it. Using a balanced scorecard approach, for example, will show others that you are not only delivering financial benefits, but that you are also meeting customer expectations, improving processes, and continually contributing to organizational learning and development.

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