KPIs (key performance indicators) are an essential tool for assessing performance. They can be used to measure many key components of procurement such as price competitiveness, supplier lead time, and compliance rate. Since procurement is at the heart of any successful organization, these tools are vital to the process. This has only become truer in 2022, following several difficult years due to the COVID-19 pandemic and other unforeseen circumstances. KPIs will be crucial to success in 2022 and beyond.
Why Use KPIs?
Being able to accurately measure the efficiency of the procurement process is always important, but it becomes even more so during an economic downturn. Procurement has a direct influence on the supply chain during such times. By using KPIs, you can not only foster cost savings, but you can more easily determine your organization’s strengths and weaknesses.
Determining Which KPIs Work for Your Business
Before setting KPIs, it is important to assess the specific strategic needs of your business. There are several different types of KPIs, and they all serve different purposes. Many factors play into what might work best for your business. These factors include your business size, location, and any compliance laws you may be facing. Choose a strategy that caters to your specific needs so that you can determine which KPIs work best.
Best KPIs in 2022
There are numerous KPIs to choose from, and your business needs will differ from others, but there are a few KPIs that top the lists of all procurement organizations. A cost savings tracker is vital since saving money is always a priority. Supplier diversity has also become more important in recent years, which the pandemic has helped to prove. This looks to be a crucial KPI in the immediate future. Supplier risk and performance are both key KPIs moving forward as well. A procurement team needs to know when to pivot from a usual supplier that’s no longer delivering on its promises, and potential new suppliers must properly be vetted for risk factors.