Purchasing Managers' Worst KPI Mistakes

PurchTips - Edition # 190 November 3, 2009

By Charles Dominick, SPSM

Are Your Purchasing KPI's Truly Strategic?

Purchasing managers often consider measuring purchasing performance to be a way of demonstrating the strategic value of the purchasing function to top management. Unfortunately, there are a couple of mistakes in measuring and reporting purchasing performance that produce the exact opposite effect.

In discussions with other purchasing professionals, I often learn of key performance indicators (or KPI's) they use. Some are good. Some are absolutely horrible!

One common mistake is considering every measurement a key performance indicator. Let me state this in no uncertain terms: Not every purchasing performance indicator is a purchasing KPI!

Another mistake is thinking that just because you can measure something means that you SHOULD measure it. Doing so dilutes your focus on what's truly important, wastes time, and can make you look bad!

Discussing KPI's reveals whether a purchasing manager is truly a strategic thinker or not. When your CEO sees your purchasing KPI's, s/he wants to know:

• How do those KPI's directly reflect contribution to the profitability of this organization?
• How do those KPI's directly reflect contribution to the satisfaction of our customers?
• How do those KPI's directly reflect contribution to the advantage we would have over our competitors?
• How do those KPI's directly reflect contribution to the operational efficiency of this organization?
• How do those KPI's directly reflect contribution to my goals?

If the answers to those questions are clear to your CEO, you're truly using strategic purchasing KPI's. Don't forget that the "K" in KPI stands for "key," meaning "important" - not important just to you, important to your CEO. So, report true KPI's, not mere PI's!

(keep reading for a FREE Offer)

Spotlight On Professional Development Opportunities

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class purchasing professional.

You see, today's employers refuse to reward employees for yesterday's skills. They demand that purchasing professionals like you use the most modern skills and achieve unprecedented results. They want you to save more money, achieve better operational performance, and reduce risk.

Earning your SPSM^® Certification by completing the Senior Professional in Supply Management^® Program is the action to take if you want to bring the most modern purchasing   practices into your organization and achieve your career potential. Learn how to earn your SPSM^® Certification (and perhaps get an iPod) at:

www.NextLevelPurchasing.com

The Latest Purchasing News

• Purchasing Managers/Directors: Are you struggling to develop a plan for improving your team's performance? If so, visit: www.NextLevelPurchasing.com/benchmark
• Discuss today's topic on our LinkedIn SPSM Group! Members can go straight to the group at www.tinyurl.com/7lmbzy and non-members can learn how to join at www.tinyurl.com/8tgfnd


• Considering a career move? Browse jobs preferring candidates with the SPSM^® Certification  at: www.NextLevelPurchasing.com/jobs

FREE Offer!!!

Are you a procurement leader struggling to quantify your department's impact on corporate success? The FREE whitepaper "Procurement Skills & Profit: The Correlation" can help you!

Copyright 2009. This article is the property of Next Level Purchasing and may not be copied or republished in any form without the express written consent of Next Level Purchasing. Click here to request republishing permission.