Embedding Procurement as Fabric of the Business
Of late I have been witnessing a plethora of communication from e-tailers with buying suggestions and have been amazed by the way the e-tailers follow on with suggestion displays (web ads) even when I visit other web sites. In a form, I view these as a form of dashboards which influence / help me decide on what next will I buy.
We are not far off from the day when we could be asked by the friendly guy in the store checkout counter 'And would you like to get dropped back to your home? we can arrange it" or get surprised with a message offering home delivery of the medicines prescribed by your doctor minutes ago, and on a casual visit to your neighbourhood restaurant you are greeted with a customised menu card with the choice of food matching your dietician's prescription, with a seamless link of B2C services.
The Walmarts' and the Amazons' of the world use analytics to profile customers and predict what the customer is likely to buy in the near future. There is an increasing need for the procurement organizations to be part of the fabric of the business and understand & deliver what the internal customer (business units) need.
Category play books & dashboards do bring in insights on the business spend areas, but fall short of many factors especially, linkage to the updated BU dashboard. Often we encounter a feast or famine situation on the availability of data. Either we have too much data, wondering where to focus or where to get the data itself. For this discussion let us assume we have the data and let us look at some typical dashboards used by business units:
Completed projects: RoI - projected VS actual return by project, project type
Planned projects: projected spend ($, %) by project, project type, Projected risk/return by project, project type, baseline vs. estimated budget by project
The easy way to communicate a Business Unit (BU) metric is to explicitly link this to the business metrics that is important and understood across the company. The challenge here is to credibly link the org-level business objective to the BU metric. There are several ways to do this and a classic approach is the org level Balanced Scorecard.
Service Performance Dashboard:
The Service Performance dashboard is aligned towards the internal customers of the BU and is represents the service level metrics which represents the performance of the service.
For example a Business Travel desk would measure:
- Delivery: On time booking and delivery of flight tickets
- Quality: Tickets booked & issued with correct information and per requirement. Proactive monitoring and communication of flight cancellation, delay. Alternate arrangements.
- Satisfaction: Average TAT to close service tickets; customer satisfaction
Performance Improvement Dashboard:
This dashboard focusses on the BU's performance improvement objectives. The all-time popular include the y-o-y cost reduction, additions and improvements to the service portfolio and improving capability / core skill index of staff.
It is imperative that Procurement Organisations embed themselves as part of the fabric of the business to deliver meaningful business outcomes and measure themselves beyond the classic theme of metrics.