Measuring Success: Actual eSourcing KPIs

During the hustle and bustle of this year’s eWorld Purchasing & Supply seminar in London, attendees had the chance to tuck-in and listen to Michael Van Keulen, Senior Procurement Manager for VF Corporation, give his insights on eSourcing best practices. Not having the chance to attend this Iasta sponsored talk in person; I was able to watch his entire presentation on Iasta’s YouTube page, IastaInc.

In one specific segment, Michael strikes a chord with the audience while talking about eSourcing KPIs. I often hear the term KPI (Key Performance Indicator) thrown around loosely and not surprisingly, organizational KPIs can start looking like the results of a poorly taken survey.

Procurement folks usually apply KPIs to things like Suppler Performance Management (as they should) but I’ve failed to see this similar type of performance management be applied to their own internal procedures on a regular basis. Sure, we all know what features and functions we want in an eSourcing tool, but what about proper tracking and reporting on the performance of our sourcing teams and of the tool itself once deployed?

Michael indicates that within eSourcing KPIs, we should really be considering at various tactical and strategic metrics and lists some examples:

  • Number of projects launched per month.
  • Number of buyer side logins over past 30 days.
  • Average time per sourcing event.
  • Number of sourcing events per FTE.
  • Number of RFX’s launched via RFX templates.
  • Percentage of spend negotiated via reverse auction.
  • Percentage of spend electronically sourced.
  • Percentage of savings per sourcing event.
  • Global reach.

I think that his advice would prove beneficial at any strategic sourcing organization that is not already tracking such numbers before and after an eSourcing tool launch.

In the meantime, if your team is struggling to prove its value internally or fighting for eSourcing budget, what better way to do so than to have readily available numbers to track, not only the hard dollar savings, but the process improvement and increased resource efficiencies? Share your feedback and ideas below in the comments section.

If you would like to learn more about how an eSourcing platform can enhance your team’s capabilities, check out Iasta. And when you are interested in getting serious about tracking some actual eSourcing KPIs, check out Iasta’s Executive Analytics Suite.

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3 Responses to Measuring Success: Actual eSourcing KPIs

  1. Good article, it’s interesting to see the different metrics and KPIs that are used to designate quality of a procurement department. Though, how would things such as global reach be quantified? In the procurement process, coming up with the correction assumptions are difficult, and correctly quantifying total cost of ownership is even more difficult. Yet with the advent of E-Sourcing, it’s exciting to see what possibilities and cost savings lie in the future for procurement.

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