Get the slides from BravoSolution Real World Sourcing – “Measuring Procurement’s Performance”

As promised, we have the link now to the slides from last weeks’ latest episode in our BravoSolution Real World Sourcing Series - "Measuring Procurement's Performance" – they’re available free on registration here.

So here are a couple of tasters to encourage you to look at the whole thing. Firstly, my three hypotheses about measuring savings in particular.

  1. Most organisations focus too strongly on “savings” as a measure of the procurement function’s effectiveness.
  2. Procurement is worse than any other business function at measuring its performance in a objective, truthful and credible manner. Even Marketing does it better!
  3. Most procurement functions deliberately deceive their bosses in terms of how they choose and apply the measurement methodology

Controversial, eh?

We then got into how savings can be measured as realistically and accurately as possible, and argued (with some thanks to Sievo for interesting thinking in this area) that different types of spend should be  treated in different ways. So there is a fundamental difference between Opex and Capex in that depreciation treatments mean that “savings” in capital spend areas don’t transfer in a straightforward way to the P & L, which is not an issue with operational  expenditure.

Similarly, recurring expenditure has some fundamentally different characteristics to “one-offs” – simplistically, we don’t have the same baseline to compare savings against with one-offs, as we generally do with recurring spend.

We then got into looking at the different factors that influence savings, some of which are wholly or largely outside procurement control, like currency, or market movements. However, we had an interesting debate around whether you still need skilled and aware procurement people to make sure any positive movements due to those factors are captured.

We did eventually get into performance measurements outside “savings” as well, and talked about balanced business scorecard approaches - but take a look at the slides to get the full picture.

And don’t forget, you can take the "test" related to the material, and perhaps qualify for a place at our celebration dinner in December, where the people with the top ten results over the whole series will hear who has won the BravoSolution education scholarship, worth £2,500. (More details here).

The final session in the Real World Sourcing Series is on November 28th 2012 and will be led by Guy Allen, talking about “The First 100 Days as a new CPO” – should be fascinating! I think there may be a couple of places left...

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