• KPIs other than cost saving?

    Looking at our team objectives for the next financial year. Cost saving is obviously a major one, however we buy high value/complex Capital Investments for Projects which are usually 'one off' and quite often sole source - therefore difficult to make as much saving, as say, our colleagues within the indirect procurement team.
    Any ideas on other measurable outputs we can think about, other than reducing supplier base?

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  • Answers (10)

  • Iain Wicking

    10/12/2015 12:10AM

    I would probably look at a procurement balanced scorecard that incorporates metrics that are derived from the benefits the business gets from the sourcing events. Internalized metrics become too myopic.

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    Donald Ferguson Totally. Your business should be helping define what matters. Cost, quality, speed, OTIF, cash, inventory, innovation, sustainabilty, service.......the list is endless and your internal stakeholders are vital help.

    07/01/2016 05:05PM

  • Mike Robertson

    06/01/2016 11:31AM

    As many have mentioned, ensure you are inline with the stakeholder expectations. On top of that you might want to consider some form of risk/reward or sharing savings benefit models for your contracts. CIPS and IACCM both support a model for Collaborative Contracting called "The POD Model" (its free to use). Its purpose is to provide a low cost, low effort model for creating an incentive within the contract for suppliers to try (without additional risk or obligation) to deliver the contract for less and share the financial reward.

    The POD Model was presented to the IACCM Academics Forum in Las Vegas 2015 to high acclaim. If you want to know more please feel free to watch the IACCM Ask the Expert video I presented (IACCM member login required) Titled: "Buyer/Supplier Collaboration - More Hype or something Tangible?" or contact me via my procurious profile page.

    The Value to you is that when there are savings achieved between Contract Award and Contract Completion they are TANGIBLE and hence can go towards Savings targets.

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  • Antoinette Brandi

    10/12/2015 01:31PM

    % DIFOT, % delivered on budget! any $ savings gained through extended payment terms or discounted commissioning spares or logistics initiatives. Anything that contributes to reduction in total cost of ownership.

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    Casey Bailey Agreed. Often an overlooked aspect are things like VMI programs that offer more than just a PPV savings, but also save Cost of Capital, Inventory Carrying Costs, Increased Turns, and the list goes on.

    10/12/2015 03:06PM

  • Justin Plokhooy

    05/01/2016 02:02PM

    I agree with Iain. Ensure that you understand what your internal stakeholders are looking for and use that as a starting point. Many times, in my experience, Time-to-Market can be just as important as the various cost savings measures. It all depends on what the stakeholders value. If you don't know, you'd be surprised at how much they would love answering that question for you.

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    Iain Wicking Good point. 'Procurement marketing' is also important in terms of letting internal customers know what you can offer and also understanding their needs (also their perceptions of procurement's role).

    07/01/2016 10:13PM

  • Sally Williams

    05/01/2016 01:01PM

    You may find the following link of use: it looks at business benefits (financial and non-financial).
    https://www.business-case-analysis.com/business-benefit.html#benefit-value-from-business-objectives

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  • Melanie Towndrow

    05/01/2016 10:42AM

    Thanks all on your responses so far! They have been extremely helpful.

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  • Iain Wicking

    10/12/2015 12:14AM

    I should have added that there are a number of templates available and you would need to workshop the metrics with your internal customers. It engages them and they get feedback in terms of procurement helping them achieve their objectives

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  • Sarah Lees

    10/12/2015 12:10AM

    Also, figures and % of spend utilising Preferred Supplier Agreements/Panels or existing Contracts

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    Iain Wicking Not really that relevant as these are unique (highly technical) purchases for largely single supplier sources. Standard and traditional measures/approaches won't really be relevant.

    10/12/2015 10:51PM

  • Cristian Martin

    09/12/2015 05:07PM

    Figures and % of spend that has followed the procurement process
    Figures and % of sole sourcing
    Figures and % of competitive sourcing
    Number of transactions
    Planned procurements in the next 3/6/12 months.

    Hope that helps?

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    Iain Wicking How are transaction relevant to a complex one of procurement that is probably with a sole supplier? The real point is how procurement generates VALUE for the internal customer.

    10/12/2015 10:50PM

    Cristian Martin One metric on its own makes no sense, but together it paints a picture.

    11/12/2015 10:29AM

    Iain Wicking Not sure what point you are making - they do innovative research so I suspect the projects will tend to be unique events. Requires metrics that also reflect what the stakeholder wants to achieve with suppliers. I’ve worked in this type of environment and it is very, demanding and highly interactive with the stakeholder in terms of creating specifications. Hence the measure needs to include procurement, non-procurement, stakeholder metrics, non-finance and financial measures. A balanced scorecard.

    07/01/2016 01:00AM

  • Fadi Abdul Khalek

    09/12/2015 09:22AM

    fair value determination in the market, if sole source, then with similar products or solutions.

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    Iain Wicking How can you have fair value? These are one off bespoke purchases with one supplier as the question states. They are unique.

    10/12/2015 10:48PM

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