Alex Saric's blog

How the Most Successful Procurement Leaders Define and Measure Success

performance review, best-in-class procurement

Today, procurement must not just find ongoing opportunities to reduce cost, but also mitigate risk, improve supplier performance, improve cash management, unlock innovation, support CSR objectives and a long list of other goals. Those increasingly include ensuring agility in the face of Covid-19 and the next crisis. As the list of procurement’s objectives continues to expand, continuous improvement is essential. It is not just the number of goals but their broad scope that make transformation a must, and a lengthy journey. Success requires mapping the right path, continuously tracking progress and course-correcting along the way.

As renowned management guru Peter Drucker famously said, “if you can’t measure it, you can’t improve it.” Unfortunately, all too often, procurement leaders can’t measure everything they need to or measure it in the right way. When looking at any challenge, it often helps to investigate how the very best operate and what distinguishes them from the rest. So Ivalua partnered with Forrester to take a broad look at Effective Procurement Performance Measurement across over 400 organizations globally. The study showed a marked difference between the performance of the most advanced procurement teams and the rest (categorized as either beginners or intermediates), and similarly noticeable differences in measurement.

The Best Measure More

On average, procurement teams that are most advanced measure roughly 50% more KPIs than beginners (and around 30% more than intermediates). They don’t just measure more, their performance reviews and bonuses are tied to those KPIs.

Alex Saric, Chief Marketing Officer, Ivalua