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In the early article, The Gold Standard, I talk about the key metric “spend under management” and its importance and correlation to high performance in a series of key procurement metrics. I also posit that in the future “newer, more refined metrics and along with them, newer, more refined maturity models will be needed to help guide procurement organizations as they progress towards operational excellence.”
In the last week’s article, Keeping Score, I note that “savings, for most CFOs, remains the primary and in many cases, sole measure of procurement’s performance.” This is important because a CPO reports into the CFO more often than any other executive and also because reporting relationships aside, the CFO is a key executive in almost every enterprise.
In my recent research report, The CFO and the CPO: One World Two Worldviews, which looks at the opportunities and challenges facing the two C-Level leaders and their departments, I make the case for the development of a standard CPO Scorecard™ that takes a balanced view of the function and incorporates (1) financial metrics, (2) stakeholder metrics, (3) process/technology metrics, and (4) people/knowledge metrics into the evaluation.
The use case for such a scorecard would be the hiring of a new CFO who knows nothing about procurement but is charged with overseeing it (has that ever happened?). The CPO can present a CPO Scorecard™ as an accepted industry baseline/standard. Having a baseline CPO Scorecard empowers the CPO and helps the CPO frame the performance discussion and present a broader view of procurement value.
Over the last year, I have had quite a few discussions with CPOs who believe (as I do) that a CPO Scorecard could offer tremendous value to the profession.
With that in mind, I would like to organize a small working group of CPOs and procurement executives to help in the development of a CPO Scorecard which we would then vet on these pages. Members of the group would get a contributor credit on the scorecard which would be made freely available to the public. The group could be virtual, but would ideally meet at least once (this fall).
Please email me or comment below with your thoughts on the idea and/or if you would be interested in participating….
Hi Andrew,
Great idea surrounding a balanced CPO scorecard. The four areas of metrics are each important and each add value. Given my background in talent analytics, I’m especially interested in hearing more about your vision for the people/knowledge metrics.
Andrew – I would love to participate. I’ve recently created a CPO scorecard with my CFO so could contribute some ideas from that process. Let me know!
Dan –
That’s great, would love to have you involved! Several other CPOs have also expressed interest. Looking at a few things but will be back in touch soon on this.
Anyone else?
Andrew:
Think you’re moving in the right direction… would like to be included and will provide any help I can… I envision your collaborated CPO Scorecard as the next vital reference for the industry (aside from your Gold Standard).