Purchasing Managers' Worst KPI Mistakes

PurchTips edition #190


Click here for the printer-friendly version.

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!

Do You Want a More Rewarding Procurement Career?

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

Earning your SPSM® Certification is the action to take if you want to bring the most modern procurement practices into your organization and achieve your career potential. Download the SPSM® Certification Guide today to learn how to get started on your journey to a more rewarding procurement career!


Need Better Performance From Your Procurement Team?

Are you a procurement leader whose team isn't achieving the results you know are possible? Maybe it's not enough cost savings. Or frustrating performance from the supply base. Or dissatisfied internal customers.

You need a performance improvement plan that's easy to implement and quick to produce results. The NLPA can help.

Download our whitepaper "The Procurement Leader's Guide To A More Successful Team." You'll learn the 7 steps for transforming your staff into a results-producing, world-class procurement team.


Are You Getting The Most Out of Your NLPA Membership?

Members of the NLPA get more than just articles like this by email. As a member, you also get access to:

  • The Procurement Training & Certification Starter Kit
  • The latest Purchasing & Supply Management Salaries Report
  • Leading-Edge Supply Management™ magazine
  • Members-only webinars 10x per year
  • And more!

If you haven't been taking advantage of these benefits, why not log in and start now?