Supply Management Content

Supply Performance Management: Critical For Procurement Measurement [PRO]

In the last post of this series, we introduced the concept of Supply Performance Management (SPM). This “Big SPM” (as compared to the “Small SPM” acronym for Supplier Performance Management) is basically about extending the concept of Enterprise Performance Management (EPM) to the supply base. One of the key concepts of Supply Performance Management is that procurement organizations must derive their value from improving supply performance on a balanced scorecard of supply rather than just measuring themselves on traditional purchasing metrics for purchase price reduction. Procurement should gauge its performance for how well it helps stakeholders move the needle on their supply performance metrics such as cost, delivery, innovation, risk mitigation, etc. and the impact it has on the metrics on their scorecards. Procurement becomes a champion for performance improvement of a balanced scorecard of supply rather then the siloed owner of purchased cost reductions.