Procurement & Performance reporting

We all recognized the need to report on procurement performance but it is a more complex area than it seems. Reporting has multiple?purposes and you could?spend hours developing KPIs & dashboards without?hitting the right objectives.

What is performance?reporting?

Procurement performance reporting enables an organization to explain how its procurement operations provide value, contribute to the achievement of larger goals and objectives, and offer a comprehensive picture of the effectiveness of its procurement strategy. Beyond communicating to stakeholders and suppliers, it should?help as well to focus your procurement teams on the right area and prioritize.

Your performance dashboard should be made of measurable indicators of progress toward desired outcomes. It should allow you to track certain goals. In some ways, it functions as a compass, guiding the organization by determining whether or not you are on the correct track toward accomplishing your long-term objectives.

Why is it important?

Many reasons why you want to have structured performance reporting. Depending on the audience, you will need to adapt what you share and the granularity but overall you want to be able to hit several objectives:

• Evaluate and monitor the efficiency of Procurement
• Optimize and streamline spend, time, quantity, and quality
• Enable procurement to make data-driven decisions & suggest process improvements.
• Align outcomes with the overall organizational goal and strategy.
• Manage risks: beyond transparency, your reporting should give insights on how best to address potential risks.
• Health of the internal relationships: ensure that procurement is engaged early (an important?one mentioned already ) and?provide the right support.
• Suppliers management and how they deliver, contribute to growth & innovation, and enable your business success,...

Plenty of other reasons but performance reporting should serve the purpose of demonstrating?the value created, giving the right insights, and enabling actions.?

How do you make it relevant?

To build the right performance dashboards, you need to follow a structured process:

1. Identify how you create value as an organization for?your company. It seems like a simple question but a) it is fundamental?to ensure that you are aligned with key company objectives and strategies?and b) you report the relevant "performance.??

2. Define your audience: You can build several dashboards depending if you are targeting executive leaders, specific business units, or your team. So, first, define the different groups and identify what matters to them in what your team is doing/delivering.

3. Build clear, consistent, and agreed KPIs: if you report on cost, risks, operational performance, etc... make sure that you define a small number of meaningful KPIs with definitions agreed with your stakeholders.

3 bis. Identify data sources: when you define your KPIs, you need to make sure that you have data sources and that reporting is possible. Don't develop metrics that need a lot of hours of manual consolidations. If you have an area you want to measure and don't have off-the-shelf data, think about proxy. For example, if you want to report on process automation, "no touch PR to PO", as an example, but don't have the system capability, maybe total PR to PO turnaround time could be a proxy until you have it available.

4. Normalize & clean your data: if you report from multiple countries & systems, you need to make sure you have consistency across the different sources and over time.

5. Build the different dashboards (i.e for the respective?audiences) leveraging automation, and APIs and minimizing any manual updates for the core data. Include data visualizations showing trends, and progress vs. targets and display some of the metrics.?

?6. Analyze, comment, and create a narrative. The value of performance reporting comes from the insights, the analysis, and the change it can be driving. You want the audience to understand why it is important for them and what they can do to positively influence KPIs.??

Performance reporting can be as well reporting predictive analytics: i.e. if we keep doing A, then we will get to this result and if you amend to A', then we will get a better result. Performance reporting is a rear-mirror view that should be used as well in its developed form to guide decisions.