“We’re a World Class Procurement Organization”

Have you heard that phrase before? I sure have. It’s bandied about by CPO’s, procurement managers and supply chain folks alike.

It seems that gold standard for procurement is to be “world class.”

Trouble is…does any of us really know what world class means?

Sure, we can “um, er and ahem” our way around it.

We say things like “It means we use best in class practices to deliver product efficiently and reduce costs” or something similar.

But really, at the desktop level, does any of us know what that actually means?

No, we don’t.

So then we go hire a consulting company, subscribe to Gartner, and publish a survey to our end users to prove to ourselves that we are best in show.

Which is great. I’m not arguing against any of these benchmarking practices.

However, benchmarking is a tricky thing. In order for benchmarking to be useful you have to be able to adequately measure your own organization.

Oooh, that’s tricky. What KPI’s do YOU have for your procurement team? Cost savings, time from PR creation to PO issuance, number of PO’s on catalogue?

Those are all good measures, used by my own organization today, but do they really tell the whole story about the success or failure of a procurement team?

I’d say not really.

And, you can take a measurement like PR to PO cycle time and compare it to the rest of the world.

But, that doesn’t always make sense.

PR to PO is a lot longer for a company like a pharmaceutical, which may need additional approvals including the DEA in some cases, so their cycle time will be longer.

Also, some people measure from the time the PR hits procurement, others measure from the moment the end user created the PR. There can be differences in the basic measurement.

As noted in the article, Are you in a class of your own? from the supplymanagement.com site:

“There will be some core similarities but procurement operates in such a wide variety of sectors, industries and technologies that it won’t always feel, for some, that apples and apples are being compared.”

The article goes so far as to report that fully a quarter of respondents to a survey they posed do not believe that benchmarking your own organization provides valuable insight.

Whoa.

So how are we to know that we are good at what we do if we don’t step outside our own world and measure?

I don’t have all the answers. I know I’ve gotten the most useful information from friends who work for other companies that are similar to mine in size, scope and products. Even then it’s tricky because due to confidentiality we all play our cards close to the vest.

To me, the truest measure of success for a procurement organization comes from the end users. Did we get them what they needed, when they needed it, at a cost that is effective for their budgets? Further, did we make it easy and efficient for them to do so?

Because at the end of the day, it’s the end user who can make Procurement’s life miserable if we’re not making it easy for them.

The end user is the best benchmark of all.