If you won’t admit your TQ (Technical Quotient) is rock-bottom, you won’t spend (or aren’t allowed to spend) budget on an outside expert focussed on Project Assurance, and decide to go ahead with selecting your own ProcureTech solution, then you should make a point to focus your selection around your best practice KPIs. First of all, your management will be happy if you improve against them. Secondly, some of the best KPIs actually require you to have good platforms in place if you are to improve against them.

To demonstrate this, in our first installment, we began a discussion of the 21 Key Performance Indicators (KPIs) for Procurement that Tanya Wade shared because they are a good starting point (as you don’t want too many KPIs as THE REVELATOR pointed out in his analysis). Today, we’re going to continue with the next 6 KPIs, bringing our discussion to 14 total.

Compliance & Risk

   PO Compliance

This requires a good P2P (Procure to Pay) or I2P (Invoice to Pay) solution that can do 3-way match against the PO, the Invoice, and the good receipt to ensure that the supplier is honouring the contract pricing and the PO quantity, and ensuring this ensures that the cost savings you negotiate actually materialize.

   Contract Compliance

This requires a great P2P or I2P solution that can not only ensure the supplier is honouring the price and quantity, but also the lead time, quality, milestones and rebates that they promise. It also requires a great contract lifecycle management solution that can track the organizational’s obligations, such as hitting an order volume by a threshold to unlock a rebate or additional discount, reviewing a new product design or doing a quality test, or making investments/payments on time (to keep the supplier’s cost of capital, and your costs, down).

   Supply Base Risk

This requires a great SRM/TPRM or (spend) analytics solution that can build integrated risk cubes that allow you to determine your overall supply base risk by geography, category, or other relevant factor.

   % of Audited Suppliers

This will require a best of breed S(P/R/L/X)M+ / TP(R/C)M solution that tracks supplier audits and can tell you the percentage of suppliers who have been audited over the past quarter and year. This is especially important if you need to adhere to carbon/GHG regulations or there is a risk of labour exploitation in the supply chain.

Operational Efficiency

   Procurement Cycle Time

This requires a great P2P platform that tracks every action from requisition through RFQ through PO through acknowledgement through invoice through receipt (in the warehouse) through delivery to the requisitioner, can compute the average cycle time end to end as well as the average time in each step, because if the cycle time is longer than industry average, or not decreasing over time, it’s critical to understand which step is the problematic one.

   Automation Rate

This is key. Your automation rate for data processing and tactical tasks should be 90% or higher. There is no excuse today for anything less. And it doesn’t have to be new-fangled experimental Agentic AI that may or may not work. Classical RPA, finely tuned for various Sourcing and Procurement activities, is just fine, as long as you are not manually shuttling data from one system to another, setting up a sourcing event for something you’ve sourced before when the contract is coming up for renewal, manually doing that monthly PO to restock inventory when demand is steady/contracted and predictable, manually building those dynamic spend cubes and manually refreshing them, etc.

Come back tomorrow for the final set of KPIs that Tanya states you need to address and how they will help you select solutions that might actually realize value for your Procurement organization.