Though procurement departments are way more respected than they were 20-30 years ago, there is still work to do. There are still some procurement departments that have vestiges of years past: seats filled by procurement people and not procurement professionals.
I am occasionally reminded of this when I have an encounter with a procurement person who clearly doesn’t know how to calculate percentage of change.
Percentage of change is perhaps one of the most important mathematical calculations that procurement professionals know how to do. In bad procurement times, executives need to know by what percentage costs are rising. In good procurement times, one of the most important procurement KPI’s you can communicate is cost savings as a percentage of spend.
If you don’t know how to do a percentage of change calculation, you run the risk of reporting the wrong numbers. Or, even worse, you may be in a position where you will be expected to calculate an important percentage of change while in the presence of the CEO.
It would be embarrassing if you didn’t know how to do it, don’t you think?
I think that any time a procurement job is being filled, the interviewer ought to ask the candidate to calculate price decrease as a percentage. An example would be “If you bought 10,000 units of an item for a total of $177,000,000 last year and bought the same quantity of the same item this year for $166,000,000, what was the price decrease as a percentage?”
If the candidate cannot answer this question correctly, the candidate should be sent home. It’s early high-school math. Maybe even elementary school math. Worldwide application of this idea would help to ensure that 100% of procurement department seats will be filled by procurement professionals, not just procurement people.
Extreme vetting? No. Just a way to ensure that the procurement profession is comprised of a greater percentage of higher-level talent.
Missed that day of math class? Here’s a video that can help…