If Procurement is to be seen as a key player in the overall organisational scheme of things, these are its 10 KPIs, or rules that shall define and measure success.
Many decades ago when I was a novice within the noble art of Procurement (or Purchasing as it was referred to in those halcyon days), my then boss oft used to quote then measure me against his first two commandments, or rules, of his so called ten commandments for a Buyer that went on to shape my career and approach to Procurement as a profession. Oddly enough he never recited his remaining eight commandments that in later years led me to think these never existed. Accordingly I eventually took it upon myself to create the remaining eight and use them as a foundation as to how I would manage Procurement functions and teams and measure both and also became part of a new hire’s induction programme.
Although all of the Rules should be of equal importance, the first two must be regarded as first among equals as if these are not met, anything else that Procurement may do, or wish to do or be treated shall become seriously compromised as failure to obey may adversely influence organisational business performance, customer satisfaction, profitability and ultimately extent of business.
Number 1 “Safety and security of supply.”
Above all else the core objective for Procurement is to ensure continuity of production or business by way of delivering goods and services on time and that meets organisational production plans and programmes. Any and all other initiatives that are being worked must compliment and not compromise this core objective!
Number 2 “No surprises if any supply issue should threaten to materialise.”
On occasion, delivery won’t meet organisational delivery requirements. When this is looking likely to happen Procurement must be aware of it and in turn notify the organisation of such in order that alternative internal mitigation plans can be deployed. It is also mandatory that prior to any need to change any production plan Procurement shall have investigated all possible supply scenarios and kept the organisation fully abreast. It is not acceptable for Procurement to have caused a production failure by way of late delivery and without prior knowledge of it!
Number 3 “Nil QHSE risks or issues with chosen supplier base or product / service provided.”
Under no circumstances must Procurement consciously do business with suppliers that do not meet the organisation’s own internal HSE objectives and that could in turn compromise its external reputation should this command not be followed with a resultant outcome of serious injury or loss of life or limb occurring.
Number 4 “Cost effective supply chains.”
Procurement ultimately is the custodian of the organisation’s financial resources that in turn carries the mandate that it must ensure maximum bang for buck. Procurement can influence the extent of the organisation’s level of profitability therefore all the more important that this rule is properly and professionally obeyed.
Number 5 “Procurement to be seen as an easy-to-do business with organisation.”
It is essential that Procurement work very closely with internal peer groups and being seen to cooperate and be visible for all the proper reasons, i.e. a key team player and not regarded as being distant or aloof.
Number 6 “100% documentation accuracy throughout the fulfilment cycle.”
Procurement must work closely with its suppliers and ensure that all documentation associated with the provision of goods and services (purchase orders / terms & conditions/ advice notes / invoices) are 100% accurate and do not cause costly internal bottlenecks or late invoice payments if not so.
Number 7 “Suppliers to be treated fairly.”
A properly treated and motivated supplier base is a major asset to the organisation, being an extension to it and a major influencer with its wellbeing. Procurement must work very closely with its suppliers, treat them fairly and with respect and in doing so ensure that the organisation can be regarded as customer of choice, as it, in turn, would wish to be considered by its own client base.
Number 8 “Procurement staff to operate at the uppermost level of business ethics.”
Under no circumstances must Procurement compromise the organisation’s reputation by dealing with any supplier in a manner that could be construed, by fact or rumour as being immoral or illegal. Procurement must never accept or do anything that could be considered as being a bribe, or deal with suppliers that may have a personal or vested interest with key internal employees within the organisation unless this has been already declared and is well known by it.
Number 9 “Procurement active engagement in Business Improvement objectives.”
The suppliers are also a major source of ideas and innovations that can continue to push the organisation forward if these are taken on, researched and deployed. It is Procurement’s responsibility to encourage and ensure this happens. The suppliers might be mandated to participate by way of set KPIs as part of overall supplier relationship management programmes.
Number 10 ” SCM leading culture change and enhancing business health as top performing professionals.”
A sure fire way of ensuring Procurement is regarded as a key player within the organisation is by its leading the way in providing best in class performance. The rules set out a map that can facilitate this: Procurement must follow these to the letter and by doing so able to influence the ongoing business direction, wellbeing and culture of the organisation.
Procurement must always be seen to be a driver within the organisation rather than being a follower. On the front foot rather than on the back foot. Attention to these rules can go a long way to ensuring this is so.
