Key figures in procurement: Do you already measure qualitatively?
At the end of September, the BME specialist group „Value Contribution of Procurement“ published a new white paper on the subject of “ Procurement Indicators“. On two pages, the specialist group summarizes the definition, responsibilities and a brief overview of key figures in procurement. According to the group, the publication is intended to provide buyers with a quick and clear practical insight.
Modern procurement in key figures
In addition to the well-known key figures such as the number of orders, complaints rate or material price development, which concentrate on the performance of operational order processing, the specialist group also looked for new meaningful KPIs that reflect the future development of procurement, taking into account the topics of digitization, automation and strategic focusing of procurement. The results are key figures for procurement such as „degree of automation“, „framework agreement quota“, „time of integration“, „efficiency of processes/process optimization“ and „internal customer satisfaction“. These now qualitative
Key procurement figures show that a development is not only taking place in procurement itself from the once operative procurer to a strategic function with added value contribution in the company. Procurement controlling also has the task of responding to this development and making it transparent within the framework of its key performance indicator survey and communication. Practical experience shows, however, that all too often this is not yet the case.
Key figures in procurement as an expression of trends, own position and degree of maturity
The collection of procurement figures serves three purposes in summary:
- presentation of the general development
Trends in business and in procurement can be mapped objectively and rationally using key figures. For example, the „Top Key Figures in Procurement“, which have been regularly collected and published by the BME since 2007, show a trend away from purely operational thinking towards processes and structures.
- survey of own position and development
Where do we stand? What goals have we set ourselves and have we been able to achieve them in the past, or what do we have to do to achieve them in the future? What developments have we made in recent years? All this can be answered by the regular collection of one’s own key figures in order to lead on the basis of facts instead of on the basis of feelings.
In comparison, however, the company’s own key figures receive even more salary. Benchmarking with others enables a better assessment of one’s own position and identification of fields of action for optimization. The old wisdom applies: What cannot be measured cannot be managed in a target-oriented way either.
Tailor-made controlling – key procurement figures pave the way
The necessity of purchasing controlling is beyond question. In very few cases, however, a ready-made package will satisfy your needs, as not every indicator is meaningful for every organization. It is more important to find the right procurement indicators for your company and report them. In addition to tried and tested operational procurement key figures, qualitative KPIs that reflect the strategic development of your procurement should not be ignored. Procurement controlling should also subject its work to a regular review regarding updating its contents and, if necessary, revise or include new key figures in procurement in order to do justice to modern procurement, which sees its focus on quality, customer orientation, innovation and strategy.
What about you? Do you still report operationally, or do you already measure qualitatively?
Managing Director, ADCONIA GmbH (Oberhausen, Germany)
Consultant, ADCONIA GmbH (Oberhausen, Germany)