Performance Dashboard for e-Sourcing

February 1st, 2006 at 07:51am Ken Jones

One of my favorite purchasing bosses would often say…“what gets measured, gets done.” Over my many years in purchasing, I found very few statements more profound. Seems like purchasing professionals always have more “battles” than they could possibly fight, so having clear direction communicated by a performance dashboard not only helps drive consistent purchasing team behavior, but also, executive understanding of the value purchasing delivers to the organization.

This adage also holds true in the area of e-Sourcing, where most executives quite frankly…“don’t know what they don’t know”. This area of purchasing is still so new that most senior executives don’t have an “intuitive feel” for the value e-Sourcing delivers, and an effective dashboard can help educate the executive types. Just communicating piece price savings for various commodities run through your e-Sourcing platform isn’t enough to drive the right behaviors and instill the right culture.

Now that you are warming up to the concept of communicating key performance indicators (KPIs) for e-Sourcing, what do you measure? Since the dashboard will become highly visible to senior executives, you must select the right metrics to communicate e-Sourcing successes and opportunities for improvement. Ah, the pressure mounts.

Fortunately, your e-Sourcing solution provider has tremendous experience in this area and your provider is likely working with companies in similar industries with comparable company cultures which came help you to “win-over” your senior management team. Whether it is RFQ cycle time or spend consolidation with preferred suppliers, your e-Sourcing solution provider can definitely help you. Don’t re-invent the wheel.

In sum, if you’re contemplating a purchasing dashboard to support e-Sourcing efforts, I’d recommend the following basic guidelines:

• Might seem like common sense, but focus on business needs first, not the enabling technology. Occasionally, an Excel spreadsheet with a couple of charts is all you need.

• Only focus on the “vital few” metrics (the 4-5 metrics that really make a difference to the business, and tell the e-Sourcing story).

• Ensure a Chief Procurement Officer or top purchasing executive is willing to act on the results communicated by the dashboard.

• Develop a culture of measurement and accountability. You may need to change the culture of your purchasing team to do so effectively.

• Install a mid-level procurement manager (at a minimum) who can drive dashboard development and continuous improvement.

• Know what you need to measure; be user-focused. In this case, the “user” is typically senior management (but the dashboard must be understood by your purchasing team).

Good luck, and remember, “publish or perish!”

Ken Jones is the Director of the Supply Chain Management / Sourcing department at Ivy Tech Community College and has worked many years in professional procurement positions at companies such as Rolls Royce, Ford, HP, and Roche.

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Entry Filed under: Functionality, General, Technology / SaaS