Procurement metrics to start tracking in 2019
Is implementing metrics to measure your procurement one of the items on your to-do list for 2019?
If so, we’re here to help you get started. In last week’s post, we covered the basics of procurement metrics: why you should track them, where to begin, and some key considerations to set you on the right track. Now, it’s time to select the metrics that make sense for your team and will help you advance towards key organizational goals this year. Here are some options to get you started.
Procurement metrics for RFP Quality
First things first! If you’re looking to measure the quality of the RFPs you’re sending to market, these metrics offer a great place to start:
- How many amendments are asked?
- How many vendor questions are asked?
- How many times is your closing date extended?
- How many RFPs are cancelled after go-to-market?
- How many vendors responded?
Procurement metrics for service improvement
In public sector procurement, internal client satisfaction is among the most important measures of performance — just as important as supplier performance and cost savings, according to the Deloitte CPO Survey Report 2018. Here are some metrics to capture this:
- Speed of response to internal requests
- Project cycle times, from RFP inception to award (benchmark to establish a baseline for different types of solicitations)
- Vendor performance (measured via ongoing end user surveys/vendor report cards)
- Speed of response to Freedom of Information requests
- Client satisfaction Survey
Procurement metrics for cost reduction
This can be a difficult metric to define, depending on your organization’s process, the types of projects you typically run, and the amount of historical detail you have. Some of the metrics which may be relevant include:
- Hard savings:
- Purchase price that is lower than the previously delivered price
- Dollar value of negotiated savings
- Reduction in a planned contractual price increase
- Price lower than the budget allocation (where no previous pricing history exists)
- Percentage of procurement spend under management
- Percentage of spend using cooperative contracts
- Procurement operating costs as a percentage of managed spend
- Number of sole source procurements
Procurement metrics for employee satisfaction
The talent gap in procurement is much-discussed, so it is good practice for teams to keep tabs on the happiness of their workforce. Some of the basic metrics for this include:
- Progress towards professional designations
- Hours of professional development training
- Employee retention
- Employee Net Promoter Score or other form of pulse survey
For many procurement teams, it can be difficult to find the time for any non-essential reporting or measurement. However, getting some key metrics in place can help you save time in the long run by providing clarity on how your team is performing against your goals. With this knowledge, you can direct your resources in the most efficient way possible towards improvement.