Measuring the success of your company is probably a primary concern at all times. But to measure the performance of your company, you likely break it down by department to simplify what you are examining. Measuring procurement performance applies this same principle by breaking down performance measurement into specific categories.
There are several KPIs essential to procurement, but the unofficial top five—total cost savings, cycle time and delivery, spend, ROI and compliance—should be examined above all other assessments. Here, we take a look at how to measure, consider and factor compliance into how well your procurement processes are working.
Compliance for Efficiency
When playing a new game, the only way to win is to follow the rules. The same school-yard principles apply to business. Compliance for businesses and suppliers establishes a set of guidelines that helps companies run more efficiently, forge healthy supplier relationships and measure procurement progress more accurately.
Setting a standard gives a clear starting point of what defines success. Anything beyond that is extraordinary and anything below indicates areas of failure and need for improvement. Compliance, in its many forms, protects companies and customers from corruption, delays and fraud.
Tracking and implementing compliance within a procurement department involves designing a compliance checklist that makes sure the company is following all federal, local and corporate regulations. It also includes management of all contracts to ensure suppliers are following through on their end of the agreement. When working on these elements together, a procurement team positions itself to always get orders on time, streamline the procurement cycle and positively affect the rest of the business.
Investing in a mobile procurement platform can assist your efforts for compliance by providing the transparency needed for staying compliant. A user-friendly platform that allows procurement specialists to research, order and invoice from anywhere takes all the complexity out of procurement and keeps all data in one place. A single view of this information conveniently presents data for overall planning purposes.
Measuring the level at which a company’s procurement team is complying with regulations and how well suppliers are complying with their contracts is a key indicator of performance. Any failure in compliance is often a sign other pieces of the procurement process are not as strong as they should be. To properly measure performance, evaluate all the factors influencing how procurement accomplishes their tasks and succeeds in procuring materials and services for the company.