Gain more value from purchasing: Create insight

To measure and optimise the impact of procurement on business results, it is important to understand and monitor the right KPIs. Let’s delve deeper into this. 

1. Cost Savings: By measuring cost savings, procurement departments can enhance their negotiating power over prices and identify savings opportunities. Savings realised by the procurement department mean lower costs and therefore greater profitability for your organisation. This can lead to a competitive advantage through lower prices and better margins. 
2. Supplier Performance: Monitoring supplier performance enables procurement departments to identify potential risks and optimise collaborations with suppliers. Improved supplier performance results in higher product quality, reduced delivery risks, and the strengthening of strategic relationships with partners. It also positively affects your company’s reputation and the products delivered, which customers and partners will appreciate. 
3. Inventory Levels and Turnover Rate: Keeping track of inventory levels and measuring the turnover rate of stock helps procurement departments maintain optimal inventory levels and reduce waste. Optimising inventory levels and increasing turnover is essential for businesses to free up capital and lower costs. And who wouldn’t want better service? Good inventory management leads to faster deliveries and shorter lead times, which you will see reflected in the positive appreciation of your service. 
4. Contract Compliance: By measuring the level of contract compliance, procurement departments can ascertain whether suppliers adhere to agreed terms, such as prices, delivery conditions, and quality standards. 
   Strict adherence to contractual terms minimises legal risks, such as potential disputes with suppliers. Furthermore, it promotes reliable dealings with suppliers, which can yield favourable conditions and potential access to innovation. 
5. Return on Investment (ROI) of Procurement Activities: By comparing the total costs of procurement activities with the realised benefits, procurement departments can evaluate their contribution to overall business performance. A positive ROI indicates successful cost savings achieved by the procurement department. This impacts operational efficiency and business results. In other words, a KPI you should not lose sight of. 

Real-time Data Analysis

By having continuous access to up-to-date information, organisations can perform better predictive analytics, leading to more accurate budgeting and cost savings.

Moreover, real-time monitoring helps identify risks, such as issues with supplier reliability, and promotes compliance and transparency within transactions. Also, try to eliminate your manual processes. The more hands involved, the greater the margin for error. 

Automated processes save procurement professionals valuable time and minimise human errors in collecting, processing, and analysing data for KPIs. With real-time access to data and KPIs, procurement professionals can quickly respond to changing circumstances and take proactive measures to improve the efficiency of the procurement department. Moreover, automated systems support better decision-making by helping procurement professionals quickly identify trends and potential bottlenecks. 

Purchasing with insight, make it fun(er)

Working with KPIs should be accessible and enjoyable to enhance engagement and improve overall performance. By using visual dashboards, purchasers can track their progress on the KPIs in a vibrant and engaging manner, while also having the opportunity to continuously learn and develop based on the insights they gain from this data. This not only creates a stimulating work environment but also encourages a culture of a more performance-driven procurement team. 

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