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New Age Procurement Metrics for the CPO’s Dashboard

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Eldredge
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Procurement as strategic component
Eldredge   9/25/2014 7:20:42 PM
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Procurement traditionally was seen as a service function -- one that processes transactions, manages bidding, and negotiates prices and commercial terms with suppliers -- but not really one that makes significant contributions to business performance or market competitiveness.


Wow - hard to believe that is still the perception of procurement. It seems to me that procurement should be seen as a strategic component of the organization.

 

Hailey Lynne McKeefry
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Re: Procurement as strategic component
Hailey Lynne McKeefry   9/25/2014 7:45:22 PM
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@Eldredge, I believe that leading organizations are seeing procurement as more than a cost center. We have come a long way.

TaimoorZ
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Re: Procurement as strategic component
TaimoorZ   9/28/2014 5:14:10 AM
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"It seems to me that procurement should be seen as a strategic component of the organization."

@Eldredge: I think the main reason why procurement isn't looked at as a strategic function is because it is considered to be playing a support role instead of being part of the mainstream value chain. The moment companies start considering it as part of their supply chain and integrate operations with the rest of the value chain, you will see more importance being given to the procurement team.

Eldredge
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Re: Procurement as strategic component
Eldredge   9/28/2014 7:22:00 PM
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@TaimoorZ - You're right. Those organizations that take a more strategic approach to their procurement function will garner an advantage.

Hospice_Houngbo
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Re: Procurement as strategic component
Hospice_Houngbo   9/28/2014 8:51:21 PM
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@Eldredge: Who is the key human resource that should be in charge of the organization's procurement strategy? How is that strategy's performance evaluated?

Eldredge
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Re: Procurement as strategic component
Eldredge   9/29/2014 8:15:30 PM
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@Hospice - It seems like it would need to be the finance organization, but with very close collaboration with engineering.

nimantha.d
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Re: Procurement as strategic component
nimantha.d   9/30/2014 2:43:21 AM
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@eldridge: Yes you have to have a close relationship with the engineers. Anyway it wont be an easy task at all. 

TaimoorZ
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Metric
TaimoorZ   9/28/2014 5:10:11 AM
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"What metrics is your organization using today? Where would you like to see it evolve?"

Like most organizations, the key metric to evaluate the performance of the procurement team is the average lead time it takes for them to fulfill a request. That, however, isn't something I totally agree with. I think the procurement team needs to be more customer driven and the true metric for evaluating performance should be the level of customer satisfaction. Anything else doesn't really indicate actual performance.

 



More Blogs from Diptarup Chakraborti
It's time for the chief procurement officer to take its place as a strategic function within the organization.

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