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Overlooked Procurement KPIs Explained

The document outlines the concept of Key Performance Indicators (KPIs) as measurable values that reflect a company's effectiveness in achieving business objectives. It emphasizes the importance of formulating effective KPIs by aligning them with organizational goals and ensuring they are communicated clearly. The document also introduces the SMART criteria for evaluating KPIs and suggests an expanded SMARTER approach for ongoing assessment and relevance.

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Mike Nguyen
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6 views6 pages

Overlooked Procurement KPIs Explained

The document outlines the concept of Key Performance Indicators (KPIs) as measurable values that reflect a company's effectiveness in achieving business objectives. It emphasizes the importance of formulating effective KPIs by aligning them with organizational goals and ensuring they are communicated clearly. The document also introduces the SMART criteria for evaluating KPIs and suggests an expanded SMARTER approach for ongoing assessment and relevance.

Uploaded by

Mike Nguyen
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Procurement Key

Performance
Indicators
Ahmad Hamad Algosaibi & Bros group of companies
21 September 2016
What is a KPI?
A Key Performance Indicator is a measurable value that demonstrates
how effectively a company is achieving key business objectives.

• High-level KPIs may focus on the overall performance of the


enterprise
• Low-level KPIs may focus on processes in departments such as sales,
marketing or a call center.
What makes a KPI effective?
A KPI is only as valuable as the action it inspires.
Too often, organizations blindly adopt industry-recognized KPIs and
then wonder why that KPI doesn't reflect their own business and fails
to affect any positive change.
One of the most important, but often overlooked, aspects of KPIs is
that they are a form of communication. As such, they abide by the
same rules and best-practices as any other form of communication.
Concise, clear and relevant information is much more likely to be
absorbed and acted upon.
Strategy for formulating KPIs
Start with the basics and understand what your organizational objectives
are.

• How do you plan on achieving them?


• Who can act on this information?
• Seek feedback from other department heads and managers

As this fact finding mission unfolds, you will gain a better understanding of
which business processes need to be measured with KPIs and with whom
that information should be shared.
Being SMART about your KPIs
One way to evaluate the relevance of a KPI is to use the SMART criteria.
The letters are typically taken to stand for specific, measurable,
attainable, relevant, time-bound. In other words:

• Is your objective Specific?


• Can you Measure progress towards that goal?
• Is the goal realistically Attainable?
• How Relevant is the goal to your organization?
• What is the Time-frame for achieving this goal?
Being even SMARTER about
your KPIs
The SMART criteria can also be expanded to be SMARTER with the
addition of evaluate and reevaluate. They ensure that you are continually
assessing:

• Your KPIs
• Their relevance to your business

For example, if you've exceeded your revenue target for the current year,
you should determine if that's because you set your goal too low or if
that's attributable to some other factor.

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