By now, many of you have read our 14th annual CPO Rising 2019 report. If you haven’t, it is only available for a few more days so… –> click here to get it.

Procurement Performance

Scoring procurement performance can be as complex and nuanced as the value that the function delivers; linking that performance to overall business objectives and results can be even more difficult. Nonetheless, it is incumbent upon CPOs to “keep score” of their team’s performance and use that opportunity to develop a set of metrics that can help procurement departments prioritize and focus their resources, track and improve their performance, and communicate how their work and results support enterprise objectives and what they plan to achieve in the future.

Businesses measure their revenues and profits for a reason – because they matter. These numbers matter to employees, they matter to owners and shareholders, and they matter to customers and suppliers. The bottom line numbers that get reported are a final “score” for a “game” that was played last quarter or last year. And, businesses, by and large, are playing that game to win. If they were not, they would not keep score. For Chief Procurement Officers (“CPOs”) and their departments, procurement results matter and they increasingly matter to the larger enterprise. Scoring procurement performance can be as complex and nuanced as the value that the function can deliver and linking that performance to overall business objectives and results can be even more difficult. Nonetheless, CPOs must keep score of their team’s performance and they should use the opportunity to develop a set of metrics that can help procurement prioritize and focus its resources, track and improve its performance, and help communicate the value that it delivers in support of enterprise objectives and what it plans to achieve in the future. “The onus is on the CPO to demonstrate clearly and unequivocally, what procurement’s value proposition is to finance [and the rest of the company],” said one Chief Procurement Officer I interviewed. To win and advance and continue to broaden the influence and impact that procurement has on the enterprise, CPOs must play the game and play it well.

Procurement Measurement

In today’s competitive business environment, having access to accurate and real-time metrics can be a game-changer. Establishing and measuring relevant metrics allows an organization to understand its “current state” while laying the groundwork for its desired “future state.” If a group is unclear on where it stands today, it cannot begin to make lasting enhancements that improve tomorrow’s performance. Tracking metrics enables continuous improvement programs to take hold and provides organizations with a better opportunity to set proper goals and objectives and “course correct” when achieving them is in doubt.

Every year, Ardent Partners presents the results of hundreds of procurement teams’  performance  across  several  standard performance metrics and key performance indicators (KPIs). These metrics and KPIs help to tell a story about the state of procurement overall, and then enable CPOs and their teams to benchmark their performance against two maturity classes – the Best-in-Class and All Others. One of the goals of this benchmarking is to provide CPOs and procurement teams with insight into where they stand in relation to their peers and how they can improve in the year ahead.

While the CPO Rising 2019 report provides the latest 2019 benchmarks, we’re also hard at work on our annual eBook and webinar (see below).

Tagged in: Ardent Partners Research, Chief Procurement Officer, CPO, Performance, Strategy