“It’s not just about cost savings--which was the traditional mindset of the Procurement function. It's about continually improving and re-evaluating how we’re buying to make sure we’re getting the best business outcomes.” - Neil Aronson, Head of Global Strategic Sourcing for Uber
Across all industries, margin and growth pressures are heating up. By 2021, 55 percent of technology procurement staff will require additional digital and analytical skills to enable their desired business outcomes (Gartner 2017). To succeed in this environment, CPOs must focus on closely aligning their team’s strategy and objectives with broader company goals. That requires changing the way their procurement and sourcing teams operate.
Changes of this nature call for a clear blueprint for transformation. And it starts with taking a closer look into current Procurement processes--and determining how success is being measured. A key insight: when organizations evolve alongside new technologies and market trends, so must the metrics needed to track performance.
Evolving Beyond Cost Savings to Accelerate Change
Historically, Procurement and Sourcing teams have been accountable for cost savings as the ultimate measure of success.
But as teams look to transform, they need to reshape their success metrics to chart a path forward. While anecdotal and periodic measurements are helpful, they are forgotten without a consistent stream of key performance indicators (KPIs) to indicate the overall direction of progress.
In fact, without clear, effective KPIs to back up these plans, securing executive support for transformation becomes unlikely. When executives understand how metrics and ongoing improvements directly align with the business, they’ll confidently support an initiative that delivers real value to the company.
Stan Garber, President and Co-Founder at Scout RFP