How Can We Make Procurement Performance Visible?

In this guest post, Procurement Leaders invites Xchanging’s Nick Ford to look at opportunities to adapt the procurement process to improve the recognition of value achieved among key stakeholders.

By Nick Ford

If you were to ask most procurement leaders to monitor a typical ’day in the life’, over 90% would say that there would be a certain amount of ’marketing and selling’ of their pision, its performance, and the tasks they undertake each and every day. Most procurement chiefs face the constant challenge of getting valuable recognition for both the performance of their team and for the amount of commercial value-added service that procurement is delivering to the rest of the organisation.

Monitoring success and progress across all elements of the source-to-pay (S2P) cycle is key to changing and/or improving this recognition challenge. Making performance management more visible to the key areas of a business is essential in justifying procurements’ operating budget and value; demonstrating both clear and unambiguous benefits that hit bottom line profit and that commercially benefit an organisation.

Delivering tangible business benefits

Technology has a major role to play here and many leading organisations are using new platforms to deliver an improved procurement experience for their internal users and stakeholders, focussed around 3 key areas:

  • As a showcase of the procurement services
  • Collaboration tools and workspaces to involve the key areas of the organisation in sourcing strategies and decision making
  • Online performance management of the procurement teams’ performance across the end-to-end S2P cycle.

The benefit for a procurement organisation of having an auditable and transparent platform for performance management cannot be underestimated; when combined with automation in the flow of paperwork to support each activity, it can provide the business with the necessary visibility and assurances that actions and targets are being managed and achieved. Such platforms can also identify who has what to approve in the procurement cycle, from sourcing plans through to requisitions and purchase orders, for how long, as well as obtaining feedback through the tools without re-producing documents and re-circulating. The procurement administration process is therefore accelerated, allowing more time to be focussed on strategic activities and sourcing.

Highlighting the real value of procurement

When the performance management of realised savings is sufficiently granular to deliver savings to inpidual budget owners or business units, then procurement is performing a wider and even more vital role in the company. It is delivering savings and value to specific bottom lines for each area of the organisation; an activity that the finance team typically does retrospectively, on more of ad-hoc basis, and not on real consumption across an integrated source to pay value chain.

Having the visibility of performance across the whole value chain can also enable effective collaboration in the annual planning process between procurement and the rest of an organisation. Engaging the wider business at an early stage within the procurement process, enabled by accurate performance data, helps to raise the profile of sourcing objectives and goals, positioning procurement as a key value-creating business function.

The increasing use of eSourcing tools on the market has also driven the need for increased visibility of results from the online sourcing events undertaken by procurement teams. For example, there is little merit in performing numerous successful e-auctions, delivering value to the organisation on a daily basis, yet only reporting the actual business benefits to key stakeholders on a monthly basis.

A call to action

Procurement professionals have long felt underappreciated in organisations, often due to a lack of understanding from the wider company as to how they are adding value. However this no longer needs to be the case thanks to the technology that now exists, offering the ability to deliver complete visibility to all parts of the organisation. So this is a call to action for procurement teams to take up these new platforms, track their progress and achievements, and earn a well-deserved pat on the back!

 

Nick Ford is customer service and delivery director EMEA, Xchanging.

Add new comment