Think about your role in procurement. Think about the huge number of outcomes you work hard to deliver every day, from the repetitive (but necessary) daily tasks, to the huge projects with looming deadlines.
Now, I want you to distil your entire, complex, multi-faceted role into just five KPIs.
That’s right – five KPIs only.
Passion for KPIs
I didn’t realise how passionate I was about KPIs until the conversation came up on the agenda at The Beyond Group’s “Productivity in Pharma” (PiP) Think Tank in Basel last month.
The room was full of heavy-hitters from the big pharmaceutical houses, including Novartis, Roche and Bristol Myers Squibb. Not necessarily CPOs, but heads of indirects, clinical research and engineering procurement. The facilitator, Sammy Rashed, led a spirited debate on what a good KPI should look like, how KPIs should work, and how they can benefit a business.
Wow! As the conversation evolved, I realised I had some strong views on how my beloved profession should be measured.
I shouldn’t have been surprised. Just after I finished my MBA, I spent a couple of years working with Alcoa’s corporate finance team on how we should measure procurement’s value, and then educating the procurement team globally about how to report the calculations. I’m also married to the global CFO of a FTSE 10 company, so I know the kind of metrics that he deems as solid, and those that are “fluff”.
What Gets Measured…
On that point, let me tell you a little bit about what I know about the mind of a Finance Director. It goes without saying that they are absolute geniuses: kind, considerate, and definitely make the very best life partners.
BUT, as I am sure you have witnessed in your own organisations, the mind of a CFO is fairly mono-dimensional. Value has to be defined and quantified in hard terms.
I put in a quick trans-Atlantic call to my husband to ask his opinion on KPIs, and was rewarded with this gem: “You can’t improve what you can’t measure”. It’s actually a variation on a common saying of his, which is “what gets measured, gets done” – but there you go. CFOs are full of surprises.
KPIs can be lagging, leading, soft, or hard – but whatever you do (according to this CFO) they must be linked to the corporate objectives, which is where I will start with my five rules of thumb for a good KPI.