Most people will say that Spend Under Management is THE most important metric when it comes to procurement KPIs, and I am not one to argue with that fact. But for most companies, and especially those who are still in the early stages of e-procurement adoption or roll-out, Spend under management is too rough to actually track the development of the program.
For the purchasing functions in the early stages of e-procurement adoption, I would propose that they track these three KPIs in order to monitor their progress:
- Order development – Spend Volume tracking both value and number of orders
- On/off contract spend – Again tracking both value and number of orders
- Usage per BU/Geography – Monitoring adoption by tracking volume and number of orders compared to the total procurable spend.
The charm of this pragmatic approach is that these three KPIs can easily be monitored using a seven point scorecard (easily fitting on a single A4 spread sheet), giving management and steering committees a clear and transparent picture of the program development; ensuring managementorial buy-in and increasing risk awareness all whilst keeping purchasing in the driving seat.
