In addition to measuring suppliers, the purchasing department needs to measure its own performance and contributions. This video discusses traditional issues in doing so, describes a set of typical purchasing department metrics, and offers a three-step approach to implementing a measurement system.
- There's an old saying that … if you can't measure something, you can't improve it. … Most companies do a pretty good job … of measuring the performance of their suppliers … and working closely with them to improve that performance. … But it's also important that the purchasing department … measures their own performance … and works to make themselves even better. … Most important, purchasing needs to demonstrate … how well they contribute to the company's … overall performance and goals. … But that's not so easy to do, measuring … and evaluating purchasing performance … has traditionally encountered several issues. … The first issues involves the large amount of data … collected by most purchasing departments. … Having too much data is the most common problem … when quite often, this can cause managers … to focus on the wrong data. … I recently read an article about this, … a survey of purchasing managers in the U.S. … stated that one of their biggest needs … is people who can help them turn data into information …
- Explain the purchasing process.
- Define purchase order.
- Describe the intent of a purchasing policy.
- Distinguish types of purchasing structures.
- List the steps of selecting a supplier.
- Identify enablers for success in worldwide sourcing.
- Perform price and cost analysis.
- Measure supply management performance.