Recently, on Linked In, Anders Lillevik, who (once) tried to buy and drowned in paperwork (which is why he decided he needed to find a Focal Point), decided to post what he thought were the six signs your procurement efforts aren’t delivering the impact they should. In his view, they were:

1. No spend visibility
2. Unhappy customers
3. Backlogs and delays
4. Poor supplier relationships
5. Reliance on manual processes
6. Department is seen as tactical, not strategic

… which were signs that your Procurement department is not delivering, but not the one sign you have to look for to determine whether or not you have a highly functional Procurement department, since these are all symptoms of a single root cause. In fact, if you wanted to go down this route, instead of identifying the core problem, you could also add the following to Anders’ list:

7. Spend is spiralling out of control while the
8. Company is having to fire-sale / toss out expired products and outdated inventory on a quarterly basis and
9. Your brand is in the toilet thanks to excessive carbon, poor working conditions / human slavery, and excessive waste (and wasteful practices) in the supply chain.
10. Every department head is screaming “The Sky is Falling!”, “The Sky is Falling!”.

… as these are also signs that your procurement efforts aren’t delivering the efforts. But if you want to know whether or not you have a highly functional Procurement department, all you have to really do is answer this one question:

Do you have a strong CPO providing quarterly metrics charting success improvements over time?

Now we know this is a bit of a cheat, as it’s actually two parts, as just thinking you have a strong CPO is not enough, you need the metric-based reporting to verify, but that’s it. If you have a Strong CPO leading a procurement team charting key metrics across all relevant areas, key categories and initiatives get managed, and, eventually, improved. Moreover, you will find that:

1. you have great spend visibility across all Spend Under Management (SUM) which will increase over time
2. you have happier customers as your quality, reliability, and predictability improve in key areas and remain consistent in others
3. backlogs reduce over time along with unexpected supply chain delays
4. supplier relationships, at least for key products and services, improve
5. process automation is employed where appropriate
6. the department starts to assist other departments with strategy, and begins its journey from tactical to strategic
7. spend increases are at least contained to inflation
8. inventory management (and inventory loss) improves
9. improved supplier vetting and risk analysis weeds out any suppliers known to be exceptionally polluting, use sub-tier suppliers that turn a blind eye to working conditions or slave labour, or be completely indifferent to CSR activities
10. the department heads stop screaming “The Sky is Falling!” and instead scream “Why Is Everything So Bl00dy Expensive!” (even though Procurement consistently meets or beats market prices)

Not perfect, but all signs that your procurement efforts are delivering the impact they should, or at least getting there.