Supply Chain and Performance Measurement using Microsoft Excel

Supply Chain / Procurement / Purchasing Professionals – What’s up for New Year? 

As globalization accelerated in such a pace which opened vast possibilities, opportunities and challenges for procurement teams across the globe. The growths of support services are considered as key points of differentiators in the market place which forced the Procurement team to increase its competitiveness.

It is key at this stage that organization identifies and assesses their current procurement strategies and need to validate its effectiveness considering the expected future developments available in the pipeline.

So what should be the priorities for procurement departments in the New Year? I have mentioned few of them below:

• Accessibility to data and information,
• Transparency in process and compliance,
• Involvement in decision making,
• Greater efficiency in procurement and demand planning,
• Flexibility in order management,
• Empowerment as a core function

What else….?

The above mentioned subjects could be part of your vision or probably part of your wish list to be achieved in 2011 and now you know that it is time to awaken and move...

So the best steps forward I believe are:

1. Measure the gap and understand the position of your Procurement Department against International Best Practices and Standards. (this will allow you to strategies and plan to achieve a minimum performance required, in a short period)
2. Identify how your department is performing by analyzing the following (this will help you to identify, your current manning and future requirement to achieve department’s potential)

• Amount spend under management v/s purchase orders processed
• Spend on direct purchases
• Spend and ROI

Now, how YOU wish to move forward and what are the steps you may adopt / try? Do you agree me with the following few points like (?)

1. What can we do to achieve competitive excellence in and through supply chain / procurement management?
2. What non-value added services and functions in the procurement can we eliminate (e.g. do we add value every time we sent a report?)
3. Do functional boundaries (titles and sub divisions) present obstacles in our procurement Department? (e.g. are we really managing all functions related to procurement or just buying products and services but still called procurement or supply chain?)
4. Instead of mitigating, are we avoiding risk by tossing a process over the wall to the other Departments? (e.g. supplier selection)
5. What can we do to improve liaison with other parts of business units or supporting units? What does the customer really want?
6. How can we really transform into a procurement / supply chain entity rather than just managing a series of functions and sections?
7. How long it takes to turn a requisition to a purchase order? And how can we shorten this cycle?
8. What measures we take to re-assure the customer that providing service is the ultimate aim of procurement / supply chain department?
9. How do we identify what is important to the customer – usually things that are not important for us?
10. Do we understand the customers operating environment or business model?
11. What can we do to form partnership and collaboration with suppliers?
12. How do we interact with suppliers to get regular feedback from them?
13. Would training program for suppliers be appropriate?
14. Does teamwork prevail over interdepartmental rivalry and politics?
15. Is the following changes are visible or considered?

• From function to process
• From profit (savings) to profitability (ability to create more opportunity to make greater savings)
• From products to customer
• From transactions to relationship
• From inventory (spend) to information

The question to you is in order to brainstorm the above points, have you ever measured the gap of your department or did you ever identify how your department is performing….?

To get this done you don’t need to spend a lot on new software or technology. We can use Microsoft excel to do it. I have attached few screen shots below, which I have prepared and will be available for a download later next week

Meanwhile, please drop me your comments or subscribe my blog, so that I will advice you once these downloads are ready.