In our last series on Why Your Tech Selection Should be KPI, and not Bell-and-Whistle, Focussed if you are not technical, we reviewed Tanya Wade’s 21 KPIs that are a great start if you’re looking to put some KPIs in place to properly program and percolate procurement. Not all of these were (the most) appropriate for all modules, but if you don’t know your tech, they were a great start.

In this mini-series, we’re partitioning the performance indicators by ProcureTech module as well as indicating a few more you should be asking for. We’ve covered the core Source-to-Contract modules, and today we are concluding with the Procure to Pay Modules of e-Procurement and Invoice to Pay (Accounts Payable).

e-Procurement

Tanya Wade’s Performance KPIs

• Supplier Performance:Supplier Lead Time
• Compliance & Risk:PO Compliance
• Operational Efficiency:Procurement Cycle Time
• Operational Efficiency:Automation Rate
• Spend Analysis:Tail Spend

For details on these, see our prior series.

Key Module KPIs

• Compliance & Risk:Maverick Spend Reduction – maverick spend is out of control in most organizations without good (e-)Procurement systems; it is important to know what is the average improvement from implementing the provider’s system (no matter what metrics the vendor throws at you, if this isn’t substantially increasing, the system is NOT being adopted)
• Compliance & Risk:Preferred Supplier Spend (Improvement) – how much of the off-contract spend is with preferred suppliers, and by what percentage is preferred supplier spend expected to increase
• Compliance & Risk:Avg Improvement/Time-to-Value in Discount/Rebate Acknowledgement – many traditional savings in office suppliers / MRO are offered in the form of rebates if a volume is hit (because the provider knows it won’t be because all organizations without good e-Procurement/Contract Management have high levels of maverick spend and they know they can often substitute SKUS due to “temporary stockout” and the buyer won’t notice and this will help ensure that the volume is not hit)
• Operational Efficiency:Automated Inventory Re-Order % – for regular inventory/MRO restocks or predictable volumes based on the manufacturing plan, the e-Procurement system should be able to submit the POs automatically
• Operational Efficiency:Repeat Order Cycle Time Reduction – for standard orders such as employee onboarding kits, monthly storeroom re-orders where the amounts need to be human verified/input, etc., on average, how much faster can these be placed vs. pre-module implementation
• Operational Efficiency:Quick-RFP / RFQ % Reduction – by what percentage does the e-Procurement system, with its integrated catalog and quote management functionality, reduce the percentage of quick RFP/RFQs that the organization needs to issue for non-strategic purchases
• Operational Efficiency:% (Increase) Spend on PO – by what percentage is on-PO spend increased

e-Procurement is all about getting Spend Under Management, ensuring contracts and included pricing are adhered to, and using preferred suppliers (and products) as much as possible (to help with standardization). This requires making it easy for requisitioners/buyers to find what they need, buyers to issue POs, and on-contract/preferred supplier spend to be easily tracked. Metrics should be in place to make sure all of this happens.

Invoice-to-Pay / Accounts Payable

Tanya Wade’s Performance KPIs

• Operational Efficiency:Procurement Cycle Time
• Operational Efficiency:Automation Rate

For details on these, see our prior series.

Key Module KPIs

• Operational Efficiency:Invoice Cycle Time Reduction – by how much, on average, do clients see invoice cycle time reductions
• Operational Efficiency:Straight Through Processing Percentage – what percentage of invoices are able to be processed straight through (with m-way match) without human interverntion
• Operational Efficiency:Average Dispute Resolution Time (Improvement) – what is the average dispute resolution time in the platform and what is the improvement over the average time reduction versus pre-system implementation
• Operational Efficiency:Early Payment Discount Opportunity Improvement – percentage-wise, how many more invoices eligible for early payment discounts can now be paid early (that couldn’t before due to processing delays), allowing organizations to improve their working capital management

Invoice to Pay is all about invoice processing automation and minimizing the amount of time that a human needs to manually review invoices for completeness and correctness and (automated) payment according to pre-defined terms. Make sure the metrics you choose reflect this.

We don’t claim this is a complete list, or every KPI that you can, and possibly should, ask for, just that if you are non-technical, and can’t judge a solution on its technical merits, if you can at least get these KPIs and force the vendor to prove them to you, then you will at least get a solution that is bound to provide you with some improvement and that, because of the real improvement potential, may actually be used.

The best solution is to hire an independent third party who is an expert in ProcureTech and who has no stake in any provider or implementer and is solely interested in doing Project Assurance for you, but if you can’t get that, at least get something which has a history of delivering measurable value to similar organizations.