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?
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.
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.
% 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.
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.
You may find the following link of use: it looks at business benefits (financial and non-financial).
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
Also, figures and % of spend utilising Preferred Supplier Agreements/Panels or existing Contracts
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?
fair value determination in the market, if sole source, then with similar products or solutions.