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Live Chat 10/30: Top 10 Metrics That Enhance Procurement Performance

104 comments on “Live Chat 10/30: Top 10 Metrics That Enhance Procurement Performance

  1. Daniel
    October 30, 2014

    Hi all, early Bird

  2. Daniel
    October 30, 2014

    Hope to attend

  3. Daniel
    October 30, 2014

    Hi all

  4. Daniel
    October 30, 2014

    Another two hours to go for this interesting section

  5. Daniel
    October 30, 2014

    Another one hour to go

  6. Ashu001
    October 30, 2014

    This specifically from Waugh-

    “If you polled most procurement executives today, about their number one metric, and what they are measured against, it remains cost reduction. That's still importnat but there are other emerging metrics that allow procurement organizations to find new sources of value,” said Waugh.

    What it clearly tells you is sticking to the Basics works more often than not-Does'nt it?

     

  7. Ashu001
    October 30, 2014

    When one looks at the 10 most Important Performance Metrics ;one wonders how high Social Media(tracking of it features here).

     

  8. Ashu001
    October 30, 2014

    I am sure that the Right Big Data Analytics solutions would work wonders in tracking Supply Chain Metrics on Social Media today.

  9. Ashu001
    October 30, 2014

    I am sure this will be an interesting topic to discuss going ahead.

  10. Susan_Nunziata
    October 30, 2014

    Greetings all, looking forward to a good discussion.

  11. Hailey Lynne McKeefry
    October 30, 2014

    We should be getting started at 2PM PST sharp, as soon as our guests arrive.  First, though, there are two housekeeping notes:

  12. Hailey Lynne McKeefry
    October 30, 2014

    First, please make a copy of your post before hitting the “post” button – just in case.  If the system “eats” one of your carefully crafted thoughts, please hit “Ctrl-Z” to recover it.

  13. Hailey Lynne McKeefry
    October 30, 2014

    This will be a fun, fast, and friendly conversation, so please do not hold back with your comments or questions.  There are no dumb questions and we value everyone's point of view.

  14. Hailey Lynne McKeefry
    October 30, 2014

    Second, if you have problems posting, we suggest trying a different browser.  IE9 is a popular choice, but sometimes find Firefox, Chrome, or Safari work better.

  15. Hailey Lynne McKeefry
    October 30, 2014

    Questions, theories, ideas, real world experiences and even friendly rants are welcome here.

  16. rwaugh
    October 30, 2014

    Hi – Richard Waugh, Zycus VP Corporate Development 

     

  17. Hailey Lynne McKeefry
    October 30, 2014

    Welcome, Richard! We are glad to have you with us.

     

  18. rwaugh
    October 30, 2014

    Thanks Hailey – glad to be here

  19. Susan_Nunziata
    October 30, 2014

    @rwaugh: welcome!

     

  20. Hailey Lynne McKeefry
    October 30, 2014

    i'm sure people will be popping up. Let's start…tell us where you see the average electronics purchasing organization using metrics today?

  21. Susan_Nunziata
    October 30, 2014

    I'm intrigued by the topic–I've always considered procurement to be the Department of No. Can you elaborate on how you see today's purchasing dept. moving beyond that impression and truly being seen as a contributor to the business?

  22. rwaugh
    October 30, 2014

    Most are very focused on cost reduction – still important in out Top 10, but middle of the pack

  23. rwaugh
    October 30, 2014

    This is about moving beyond Dept of NO – or even just cost reduction to finding other sources of value

     

  24. rwaugh
    October 30, 2014

    #9 is the List is Incremental Revenue from Procurement Led Supplier Innovation – so Top Line benefits

  25. rwaugh
    October 30, 2014

    In a post-recessionary time, mature procurement orgs are seeing diminshing returns on Sourcing Cost reductions

  26. rwaugh
    October 30, 2014

    They are now focusing on incremental revenue thru supplier collaboration to bring new products to market, create joint supply chain efficiencies etc.

     

  27. Hailey Lynne McKeefry
    October 30, 2014

    what do you think is the least used metric?

  28. rwaugh
    October 30, 2014

    The Top Qaurtile of Proc Orgs that are tracking Supplier Innovation credit 7.4% of total company revenues emanating from  Procurement led supplier innovation

  29. rwaugh
    October 30, 2014

    This Supplier innovation Revenue is emerging – and difficult to track – so probablu least used now, but GROWING in importance

  30. Hailey Lynne McKeefry
    October 30, 2014

    it seems as if innovation, let alone the net result of it might be hard to measure.

  31. rwaugh
    October 30, 2014

    Another Emerging Metric is Net Promoter Score – tracking internal customer satisfaction

  32. Hailey Lynne McKeefry
    October 30, 2014

    What do you think it is about net promoter that is bringing it to people's attention now?

  33. rwaugh
    October 30, 2014

    Hard to put revenue number on Supplier Innovation in every case – but tracking Supplier Innovation KPis – on process imprrovement, service levels, Quality – a real focus area

     

  34. Hailey Lynne McKeefry
    October 30, 2014

    Bringing SuNYC questoin to the top, it's a great one: Can you elaborate on how you see today's purchasing dept. moving beyond that impression and truly being seen as a contributor to the business?

     

     

  35. Susan_Nunziata
    October 30, 2014

    @Hailey: Great question, I've heard Net Promoter Score mentioned more int he last 3 months than I have ever before. Why is this suddenly a metric that matters, and how accurate is this score, really?

  36. rwaugh
    October 30, 2014

    Procurement is constantly striving to increase influence/control on corporate spedning – SUM (Spend UNder Management – the #1 Metric on our list).  Higher NPS means stakeholders see Proc as a business partner and are more likely to engage them to help manage their budgeted spend

  37. rwaugh
    October 30, 2014

    With NPS, there is kind of a Social media context – the more Procurement is “trending” and creating a buzz – the  more likely they are to have a “seat at the table” and opportunity to increase SUM

  38. Hailey Lynne McKeefry
    October 30, 2014

    Certainly supply chain and procurement are having to prove themselves as real contributors to the corproate bottom line. How can these metrics be used to make those arguements? What do you see the C-suite looking for in terms of informatoin that has meaning to them and what they are trying to do?

  39. Kim Davis
    October 30, 2014

    Is procurement ever a profit center?  Or am I just showing how little I know about procurement?

  40. rwaugh
    October 30, 2014

    Metric #6 is Procurement ROI – best way to express economic value to C Suite Execs

  41. rwaugh
    October 30, 2014

    Top Performers are generating 10X ROI for every dollar invested in Proc Org

  42. Hailey Lynne McKeefry
    October 30, 2014

    That's an amazing statistic… what about the procurement process are these organizatoins leverage to get this sort of return>?

  43. rwaugh
    October 30, 2014

    Expressing Proc contribution in terms of ROI makes the argument for a “Profit Cneter” instead of “Cost Center”

  44. rwaugh
    October 30, 2014

    Top Performers achieving 10X ROI have world-class processes, automated with World-Class technologies – and World-Class people

  45. tgajewski
    October 30, 2014

    With respect to NPS is seems dangerous to have internal customers evaluating performance given the Fundemental Attribution Error and the Self-Serving Bias phenomenon.  Help me through this.

  46. rwaugh
    October 30, 2014

    They spend less time on tactical transaction processing and more time on strategic Supply Management

  47. Hailey Lynne McKeefry
    October 30, 2014

    Automation, when it allows people to be more strategic, is often transformational.

  48. rwaugh
    October 30, 2014

    Well NPS is effective beacuse it removes the outliers – those that are passive or neutral from the equation

  49. Hailey Lynne McKeefry
    October 30, 2014

    Welcome tgajewski

  50. Hailey Lynne McKeefry
    October 30, 2014

    @Rwaugh, are there any traditional metrics that ought to be abandoned by supply chain and purchasing orgs?

  51. Ashu001
    October 30, 2014

    @Hailey-One would wonder what metrics (of the Old School Styled ones) one should keep /or hold onto today.

  52. rwaugh
    October 30, 2014

    And bottom line on NPS -most procurement organizations can't mandate that stakeholders use them – especially for sensitive categories like Mktg., Legal, HR – customer satisfaction is key to a seat at the table

  53. Hailey Lynne McKeefry
    October 30, 2014

    Hi, tech4people, glad you were able to make it back!

     

  54. Hailey Lynne McKeefry
    October 30, 2014

    @tech4people, cost reduction is always going to be on the list…don't you think?

  55. Kim Davis
    October 30, 2014

    I see.  If procurement is more efficient, you can calculate an ROI, and it no longer looks like a way to spend money!

  56. Hailey Lynne McKeefry
    October 30, 2014

    welcome, Kim!

  57. rwaugh
    October 30, 2014

    Don't think Proc every gets away from PPV – Purchase Price variance to track cost reduction – but it shouod not be #1 (#5 on our list) – proc needs to transition to more holistic view of biz value beyond cost reduction

  58. screenwriter
    October 30, 2014

    what are #'s 1-4, if PPV is #5?

     

  59. rwaugh
    October 30, 2014

    Bigger Picture is Supplier Management – especially Risk Management and Innovation.  Challenge is most organications simpy have TOO MANY suppllers – ~6K per $1B Spend

  60. Hailey Lynne McKeefry
    October 30, 2014

    welcome, screen writer!

     

  61. rwaugh
    October 30, 2014

    World Class companies manage about 2/3 fewer suppliers than the peer group – ~2K per $1B spend

  62. Ashu001
    October 30, 2014

    @Hailey-I was always here! Won't leave EBN for the world! LOL!! just struggling to wrap my head around what all Waugh is referring to here.

  63. rwaugh
    October 30, 2014

    Fewer suppliers means less risk and better collaboration

  64. Ashu001
    October 30, 2014

    @rwaugh-Supplier Management? How would you recommend COmpanies do that effectively today?

    I mean fewer suppliers can also mean that if one key vendor goes down(bankrupt,etc) you are held to ransom by the remaining vendors still standing?

  65. rwaugh
    October 30, 2014

    Making the point on Supplier Management – more critical than ever – take Contract Manufacturing in High Tech/Electronics

  66. Ashu001
    October 30, 2014

    After all it needs time and effort to cultivate relationships which work with Vendors today.

  67. rwaugh
    October 30, 2014

    Supplier Rrationalization does not mena Sole Source – but it meands concentrating Spend and Supplier Management Resources on fewer, more strategic suppliers williing to invest in the relationship, interms of driving SC effiecinecies and innovation

  68. screenwriter
    October 30, 2014

    what are the differentiating factors between Zycus and say Ariba or SAP?

     

  69. screenwriter
    October 30, 2014

    why should we consider Zycus?

  70. rwaugh
    October 30, 2014

    Hmm not sure Zycus solutions are the topic per se, but differentiation is ease of use and integration. Relative to the topic, tracking these kind of metrics requires holsitic visibility and an integrated and esy to use suite of tools such as Zycus

  71. rwaugh
    October 30, 2014

    Let's take Spend Visibility (#2 on our list)

  72. screenwriter
    October 30, 2014

    I'm interested in  contract compliance (#3 on the list). Are electronics OEMs in touch with this generally or is it still challenging? What should we be doing to get a better handle? What outcomes might OEM's  expect from doing better?

  73. rwaugh
    October 30, 2014

    Spend Viz is foundational – unless you know what your are buying, from whom, and in what quantitiess, u can't be strategic about procurement

  74. rwaugh
    October 30, 2014

    Contract Compliance is better in Elctronics than many industries, but challenges remain

  75. Hailey Lynne McKeefry
    October 30, 2014

    I'm glad to hear our industry is ahead in something! Sometimes, I think we get painted with that “old school” brush!

  76. Ashu001
    October 30, 2014

    @rwaugh-But in Contract Electronics(Especially related to Consumer Electronics) that Spend Visibility is close to NIL today.So how will companies cope?

    After all what is a massive Hit today may easily become a flop 6 months in the future.

  77. rwaugh
    October 30, 2014

    Big issue is Contract Visibility and Purchasing Compliance – unless contracted vendors, pricing, and terms are visible at the moment of truth – when a user is creating an order – non-compliant, rogue spend happens

  78. Hailey Lynne McKeefry
    October 30, 2014

    @rwaugh, i was at a conference yesterday on high tech supply chain and one person told me that a lot of rogue spending comes in the design phase, which then creates challenges when it comes to taking a product from design to manufacturing. This person was a buyer an electronics (networking hardware) giant

     

  79. rwaugh
    October 30, 2014

    good news in Electronics is these are tangible product categories – less “squishy” – lend themselves to having specific contracted items, SLAs and “classifiable” spend by product category

  80. rwaugh
    October 30, 2014

    Goal in Electronics/High Tech is early procurement involement at design stage – without it, costs become designed in, with little ability for procurement to influence later in the product lifecylce

  81. karenfield
    October 30, 2014

    hi Karen Field here from EET

  82. Hailey Lynne McKeefry
    October 30, 2014

    do you see many differences between startups and larger more mature manufacturers? Do the same metrics apply across the board?

  83. Hailey Lynne McKeefry
    October 30, 2014

    Hi Karen, thanks for stopping by!

  84. rwaugh
    October 30, 2014

    One Metric we haven't talked about yet – Supply Management resource Allocation – are the right people doing the right things?

     

  85. rwaugh
    October 30, 2014

    Across industries 60% of procurement resources are tactical and 40% strategic – this needs to be inverted

  86. rwaugh
    October 30, 2014

    This is true in Electronics too – high volume parts/orders/suppliers means lots of tactical, transaction processing

  87. Hailey Lynne McKeefry
    October 30, 2014

    @Richard, we talk a lot about the gap between the number of people who have been trained and the number of jobs. It seems like finding folks with teh right skills is only going to be increasingly difficult. does that allign with what you are seeing?

  88. rwaugh
    October 30, 2014

    Required skills changing – and right skills in short supply

  89. Hailey Lynne McKeefry
    October 30, 2014

    We are nearing the top of the hour so line up any last questions  you have for our guest!

  90. rwaugh
    October 30, 2014

    Emphasis shifting from Negotiation Skills to broader business and relationship management skills and analytical and technical capabilities

  91. Hailey Lynne McKeefry
    October 30, 2014

    @rwaugh, that's a perfect storm isn't it? At the same time, there's a great opportunity for people who want to go through route of becoming expert in strategic supply chain management.

  92. screenwriter
    October 30, 2014

    Thank you for doing this Zycus & EBN…Look forward to more info sessions like this

     

  93. Hailey Lynne McKeefry
    October 30, 2014

    At the conference i mentioned that i went to yesterday (on high-tech supply chain) it became clear that we've about tapped out on cost reduction in many supply chains. We really do have to look for other ways to improve performance.

  94. Hailey Lynne McKeefry
    October 30, 2014

    @rwaugh, any final thoughts you want to share?

  95. karenfield
    October 30, 2014

    We see the same training with engineers – is the lack of training an issue because of resources, or not enough qualified people coming up through the ranks?

     

     

  96. Hailey Lynne McKeefry
    October 30, 2014

    @Screen Writer, thanks for stopping by. Great questions!

  97. rwaugh
    October 30, 2014

    There are lots of opportunities – key is to master analytics as a core competence – will be driving force for procurement leaders of tomorrow

  98. Hailey Lynne McKeefry
    October 30, 2014

    @Karen, certainly a lot of universities are developing both undergraduate and graduate training programs… but i suspect the effort is a response to demand not in advance of it…it will take time to get people through that pipeline.

  99. rwaugh
    October 30, 2014

    Thanks for all the great input – with these Top 10 Metrics in mind, any organiztion could track their progress towards becoming World Class

  100. karenfield
    October 30, 2014

    Thanks Hailey, again similar issues with engineering!  Thanks @rwaugh for sharing your insights today. I enjoyed reading through the comments!

     

  101. Hailey Lynne McKeefry
    October 30, 2014

    Always a pleasure to have you here… I hope you'll stop by again!

     

  102. Praneeth
    April 15, 2015

    Nice post thankyou

  103. vikramsuri
    April 23, 2015

    great information thank you

  104. jithuhoney
    June 1, 2015

    best information

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