As the old business adage goes, “what gets measured gets done.”
This is certainly true in procurement.
If you want to do the right things for yourself and your stakeholders, you need to measure the right things and do it efficiently. You also need to ensure that you are measuring what your stakeholders want and what you are in fact delivering. It’s a foundational competency.
For example, in a past Hackett Group procurement key issues study, “value contribution visibility” ranked third (after sourcing and category management) in terms of procurement key capabilities that were viewed to be major or critical, with 76% of firms having picked this. It even outperformed “SRM programs,” which got the fourth slot. In other words, the competency for value contribution measurement was higher than an area of actual value creation! (In the 2017 version of this report, “measuring value beyond savings” is a big part of Priority #1 — improving the stakeholder experience.)
In this research brief, I’ll discuss how you can assess the quality of your procurement scorecard and how to improve it. To do so, I’ll assume that you have some type of procurement scorecard already, and that maybe you’ve even already adopted some smart principles to it. But, I’m going to go deep on this one and ask you a set of 21 questions about your scorecard. This first installment covers the first five.