Will monitoring spend increase performance?
Posted on 22nd August 2018 at 13:12
The procurement department plays a critical role in all companies ensuring that what is purchased is in the best their best interest financially. So will monitoring spend increase performance?
In the words of Peter Drucker "If you can measure it, you can improve it." Measuring purchasing performance is important,
A reduction in the cost of raw material and services can allow companies to competitively market the price of their finished goods in order to win business. An obvious performance measure of the success of any purchasing department is the amount of money saved by the company. There are a number of performance measurements that businesses can use when they measure purchasing performance, but we will focus on spend within this mini blog:
Monitoring spend on a regular basis and comparing it to either previuos month/qtr/year or standard cost will provide a moving variance that can be used to track trends and also provide critical data for management:
Top Supplier Spend
Top Category Spend
Track contracted or Non Contracted Spend
The above spend analysis can show you how monitoring over time makes it possible to highlight positive/Negative movements in the procurement function in relation to delivering savings, but also in terms of monitoring spend with specific groups of vendors or categories.
Making your savings or efficiency projects turn out well relies on having the right management information that allows you to make the necessary adjustments along the way to increase the departments performance.
Pro-Outsourcing can help you. We have a proven background in delivering purchasing as a service. Pro Outsourcing use MCIPS qualified staff to manage spend and can implement cost savings projects.
Call today and we can share our numerous case studies highlighting success.
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