Can You Measure Your Supply Management Goals?
Today’s procurement leaders aim to be their suppliers’ Customer of Choice, to deliver a Sustainable Competitive Advantage, and to be an Indispensable Business Partner. If those are going to be meaningful goals, there need to be metrics we can apply to measure our progress.
By now, all major multinational companies understand that their cost structure is dominated by what they spend on purchased goods and services. Further, an increasing number of firms recognize the opportunity from the sheer size of outside spend relative to the cost of goods sold (COGS) plus the historically limited attention to the supply function. When these two factors—size and neglect—are combined, it becomes evident that improved supply management may be the best way to improve overall competitiveness. Accordingly, supply management leaders are articulating grand visions for supply management that I refer to as “illustrative goals.” The most common are:
be the Customer of Choice (CoC);
deliver an absolute and Sustainable Competitive Advantage (SCA); and
- be an Indispensable Business Partner (IBP).
I call these goals illustrative for three reasons. First, no one ever really expects them to be completed or the goal to be fully reached. Second, there is rarely a “hard number” attached to them. Third, they seem to have the flavor of a moral platitude as opposed to a well-defined objective—like cod liver oil, they must be good for your organization.
Although few organizations assign a metric to track their success, these illustrative goals have grown steadily more ambitious as supply management has increased its scope and organizational influence. Still, for these goals to be more than moral platitudes, we must be able to measure our progress.
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By now, all major multinational companies understand that their cost structure is dominated by what they spend on purchased goods and services. Further, an increasing number of firms recognize the opportunity from the sheer size of outside spend relative to the cost of goods sold (COGS) plus the historically limited attention to the supply function. When these two factors—size and neglect—are combined, it becomes evident that improved supply management may be the best way to improve overall competitiveness. Accordingly, supply management leaders are articulating grand visions for supply management that I refer to as “illustrative goals.” The most common are:
be the Customer of Choice (CoC);
deliver an absolute and Sustainable Competitive Advantage (SCA); and
- be an Indispensable Business Partner (IBP).
I call these goals illustrative for three reasons. First, no one ever really expects them to be completed or the goal to be fully reached. Second, there is rarely a “hard number” attached to them. Third, they seem to have the flavor of a moral platitude as opposed to a well-defined objective—like cod liver oil, they must be good for your organization.
Although few organizations assign a metric to track their success, these illustrative goals have grown steadily more ambitious as supply management has increased its scope and organizational influence. Still, for these goals to be more than moral platitudes, we must be able to measure our progress.
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