The Path To Best-in-Class Procurement

What Does It Take To Be Best-in-Class?

PurchTips Edition #404

If you want to achieve best-in-class procurement performance, you have to take four steps on the path there. They are:

1. Rightsize your metrics. Performance improvement can be almost meaningless if you’re improving at the wrong things. So, at least yearly, assess whether the metrics your procurement department is using are the best ones. For example, if your charge is to achieve maximum cost savings but two of your major metrics are “number of suppliers used” and “percentage of invoices with discrepancies,” there’s a problem. Always align your metrics with your charge.

2. Outpace yourself. One way of knowing how well you’re doing is by comparing this year’s performance versus last year’s performance. If you’re not doing measurably better, at face value, it appears that your procurement department is failing to meet its own standard. Like a fine wine, a procurement department should get better over time, not worse.

3. Outpace business growth. While comparing a procurement department’s performance over time is essential because it shows, with a maximum number of constants, the rate of improvement of the department. What it doesn’t communicate is whether that rate of improvement is fast enough for the organization. For example, if the procurement department’s total savings is 10% higher than last year, that sounds good. But, if the organization had sales and spend growth of 90%, all of a sudden a 10% improvement sounds pretty weak.

4. Outpace the industry. Even if you achieve year-over-year gains and exceed business growth, you still are only performing well by your own standards. Are those standards too low? The only way to know is to compare your performance measurements with those of other procurement departments. You may find that you’re indeed performing well. Or you may find that there’s a long way to go to be best-in-class. But that’s not a bad thing. Those that know how best-in-class procurement departments perform have a better chance of attaining similar success than the clueless.

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 Infopack today to learn how to get started on your journey to a more rewarding procurement career!

Download

Learn More About Procurement Talent Management

Want to know all the details behind world-class procurement talent management? Simply download the NLPA’s new whitepaper, “Procurement Talent Management: How To Recruit, Train & Retain a Modern & Awesome Buying Team.”

You’ll learn the two current approaches to procurement recruiting, how to use the SPSM-BOK® Mastery Model to plan procurement training, and five powerful retention techniques. If you’re a leader attempting a procurement transformation, you must read this whitepaper!

Download


final

Want to get more procurement articles by email for free?

Members of the NLPA get great articles just like this by email every two weeks. As a member, you will also get access to:

And the best part is that membership in the NLPA is Free! Sign up today and you'll receive a username and password that will allow you to access all of the benefits that come with the NLPA membership.


Copyright 2018. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By Charles Dominick, SPSM, SPSM2, SPSM3

This is the Web-based version of this article. Click here for the printer-friendly version.



 
 
 
 

Don't miss this! Save $1,054 on SPSM® Certification (Level 1+2) Use Code PAYHALF9 Offer Ends in TimerClick Here