Aligning the procurement function with the goals of your organisation is one of the key ways to improve the effectiveness – and success – of the procurement team. Maintaining focus on the activities that deliver value will also improve procurement’s relationship with the rest of the organisation. So what are the procurement value-drivers that you and your team should be focused on?

The following seven areas can be used to form a balanced scorecard for procurement, a consistent, coherent and succinct set of measures that report on its contribution.

Delivering against category benchmarks

Measuring and improving performance against category or historical benchmarks is one of the key ways to demonstrate the value of good procurement practice. Does the procurement team deliver savings that are competitive with the organisation’s sector?

Maximising spend under monitoring/management

Spend that is outside the scope of the procurement team cannot be leveraged to benefit the organisation. ‘Maverick’ spend also lies outside the scope of measurement and benchmarking. Increasing the proportion of spend under management is a key and a simple measure KPI that demonstrates how well the procurement team are penetrating the organisation.

Optimising the procurement cycle

Is the role of procurement well understood across the organisation? How many categories of spend does the procurement team participate in? What is the cycle time for procurement process by department and event type?

Contract management and compliance

Procurement shouldn’t just see its role as beginning and ending with purchasing. Ensuring that the agreed contract delivers the agreed value, volume and quality is, in most cases, just as important as agreeing the contract in the first place. Monitoring and actively managing contracts can deliver significant value and savings.

Achieving non-financial value

Efficiency is one of procurement’s biggest contributions but it is important to ensure that non-financial value is considered too. It is increasingly expected that procurement can demonstrate its contribution by negotiating additional value and/or benefits with suppliers as well as ensuring they deliver the agreed quality and volumes at the right price.

Strategic development of procurement

One thing that procurement teams and managers cannot do is stand still. In order to be judged by the same criteria as other functions, procurement needs to continuously look for new opportunities and practices. Are you leveraging the market knowledge of suppliers to inform business decisions? Are you looking for different ways to contract or generate requirements? Are you investing to develop the right skills in the procurement team?

Alignment with organisational goals

All of these procurement value-drivers are about aligning procurement practices and activities with the goals of the organisation. Make sure you know what the priorities are and that procurement operates in the context of what delivers value for the organisation as a whole.