A close colleague of mine frequently mentioned to me that: "You can't manage whet you don't measure "when he was trying to figure out better ways to manage his business unit…
He is right on the spot, unless you measure something you don't know if it is getting better or worse. You can't manage with an eye towards improvement if you can't measure performance.
This college of mine - his name is Peter Harrow - is always thinking about how to use technology and management practices to automate business processes and workflows to better position his department as a key contributor to the Company overall success.
During our collaboration we created a set of Information Systems and Dashboards where important metrics and benchmarks were published and thus allowed him and his Department get close, instant look at the business.
Peter at that time was in charge of the Procurement Department and because of his business savvy, and inclination for analytics, he elevated that Department to a whole new level.
Below are some of the metrics that Peter and I were thinking implementintg, as well as some other that are of value to the Procurement process.
Cycle Time of a Purchase Order.
Average Time to procure.
Average number of modification to Purchase Orders.
Percentage of Emergency Purchases.
Percentage of Suppliers responsible for 80% of spends.
Percentage of Payable Invoices without a Purchase Order.
Percentage of key stakeholders satisfied with suppliers.
Procurement spent per Procurement Employee.
Procurement Employees as a total of Employees.
Procurement OPEX as a percentage of total spends.
In my opinion, Analytics will be one of the most used tools in business in the next few years, and it will require real leadership to start implementing it now.
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