Along with cost reduction, a primary goal of any strategic sourcing initiative is to establish supply chain and procurement processes that allow for continuous growth and improvement. To do so, having an accurate system for reporting procurement data and measuring your results against industry metrics is essential. In other words, it is critical for your sourcing department to be able to show the value it brings to the organization through data analysis and reporting. Therefore, when evaluating a company’s strategic sourcing and procurement department’s current state, metrics and reporting should be a point of critique.

To derive value from reporting, there must be specifically-defined metrics and Key Performance Indicators (KPIs). However, generic KPIs won’t make the grade; just as procurement is responsible for a number of activities such as Supplier Relationship Management and Strategic Sourcing, the KPIs should accurately reflect these varying functions. For example, both Strategic Sourcing and Supplier Diversity programs (SDP) may include metrics regarding the number of participating suppliers. But SDP may also include measurements on the innovation as a result of a diverse supply base, whereas may include percentages of savings.

Beyond establishing ideal reporting measures, it is important to make sure the metrics are communicated and well understood among stakeholders and corporate partners. Oftentimes, the purpose and value of the data can be lost if the wrong information is being tracked. For this reason, evaluating who is responsible for the reporting and how they conduct it is also an imperative. Once the data has been communicated, it has to be leveraged to make an impact on your company and allow for improvement.

This July, Source One released a new whitepaper: Is It Time to Transform Your Procurement Operations? The guide shares Source One’s best practices for evaluating your Procurement organization’s current state, focused specifically on reporting as well as people, processes, and technology. To learn more about how Source One can help take your procurement operations visit Source One’s Procurement Transformation Advisory page
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