A Perspective on Sourcing Operations and Compliance From Honeywell’s Camille Batiste

sourcing operations

On Thursday at the Institute for Supply Management Metrics conference, in Philadelphia, Camille Batiste, vice president of sourcing operations and compliance at Honeywell, gave an engaging talk on procurement measurement and metrics. At Honeywell, her organization, sourcing and procurement, also owns operational excellence, which manages reporting as part of its charter.

While much of the talk engaged the audience in an interactive manner, Batiste also shared both historical and current metrics she recommends for using to measure the impact of procurement on the organization. Historical metrics include many focused on delivering costs savings, such as:

  • Cost avoidance
  • Savings (basis unclear)
  • Cycle time
  • Automation
  • Number of contracts/contract compliance
  • Price reductions

But there are more valuable metrics procurement can deploy, Batiste argues, that can help tie its success directly to business success. The challenge with these rear-facing metrics, in part, is they may not fully factor into account:

  • Price increases (indirect)
  • Consumption increases/decreases and impact to total cost
  • Increased consumption – which does not mean more savings!

What matters most is metrics alignment between procurement and the business. Here, Batiste suggests considering procurement’s direct impact and corresponding KPIs in the following types of areas:

  • Revenue, including quality, delivery, scrap sales and compliance
  • Income, including spend (cost), spend as percent of revenue, purchase price variance (PPV), price per each pound/ton.
  • Working capital, such as inventory and payment terms

To drive overall metrics alignment, she suggests:

  • Starting with the financials in mind
  • Looking at forecasted spend, not just historical
  • Aligning procurement strategy with business strategy
  • Seeking feedback from key stakeholders

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