Supply Excellence — Procurement Poll Results

Procurement Poll Results

September 16th, 2008 · by Justin Fogarty · No Comments · best practices, spend analysis, supplier management, supply management, supply risk

Last Wednesday, Purchasing magazine hosted a web forum on measuring the effectiveness of the procurement department. The panel, which was moderated by Purchasing Chief Editor Paul Teague, consisted of the VPs of Procurement from Exide Technologies and Harland Clarke as well as purchasing directors from Bell Inc. and Polaris. The replay is available here and worthy of your time if metrics are (or should be) part of your job description.

Since it’s political season and I’m currently obsessed with polling data, I thought it was worth while to highlight some of the audience poll results. It’s worth noting that the webinar had well over 1,000 attendees, so the polls should represent a pretty solid cross-section of procurement roles, industries and geographies.

The questions, results and interpretations are:

1. Which procurement area does your organization focus on most to measure performance?

Sourcing - 47.1%
Contract management - 14.9%
Requisitioning - 6.7%
Payment and settlement - 8.1%
Supplier relationships - 23.0%

The panel considered this a positive sign that procurement’s efforts and metrics are focused on the right areas - those areas where they can have largest impact. George Bordin from Harlin Clarke, said the poll shows a focus on “higher end and strategic vs transactional functions.” In other words, the results seem to show that the audience has moved beyond a focus on repetitive purchasing functions and towards a more strategic role in driving efficiency and cost savings. Good news certainly, but the next questions dive deeper…

2. Besides cost, which parameter do you focus most on for measuring performance?

Cycle time - 3.8%
Volume - 3.8%
Compliance - 23%
Coverage - 3.8%
Suppler performance - 65.3%

The 1st and 2nd ranked answers, supplier performance and compliance, are essentially linked. It’s about making sure your suppliers are living up to their promises and delivering the right products on time and on budget. Dave Dickerson of Polaris agreed that measuring supplier performance is “where you’re really going to move the needle on your metrics.”

More good news that the panel believed the audience was on the right track with what they were measuring. But the proof is always how those measurements are actually being used to help the business…

3. How does executive management use procurement information?

Tactical and opportunity management - 19.3%
Regular inclusion in business planning - 32.2%
Critical to decision making - 22.5%
Critical to risk mitigation - 12.9%
Limited interaction with executives - 12.9%

Obviously, there is really only one “wrong” answer here - Limited interaction with executives - and luckily only 12.9% described their business that way. For the other 87%, their focus on metrics (which hopefully show strong results for their spend management efforts) appears to be helping to gain respect, influence and responsibility.

Justin Fogarty is Managing Editor of Supply Excellence. For any questions or feedback on the blog or its contributors, Justin can be reached at jfogarty[at]ariba.com.

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