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Strategic Sourcing – Performance Management beyond Savings 

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In turbulent times, Performance Management is a key management tool to focus company’s resources on the most important matters.  In a holistic Performance Management approach, Strategic Sourcing departments should be also involved to increase their value-add for the company.  As a starting point, Strategic Sourcing responsible need to face a (misleading) perception that their activities are solely focused on savings.  Certainly, savings play an important role, but in modern sourcing departments, a multitude of other indicators and activities play an equally important role.   

This means, that Strategic Sourcing managers need to understand the key performance drivers / indicators to establish a reasonable Performance Management approach.  Given our experience during our advisory & support projects, these drivers and indicators need to be broken down from Strategy to execution and reporting in a continuous improvement way. 

Results indicators measure the EFFECTIVENESS with direct link to the Corporate Strategy and include savings, costs, and/or price as well as for more mature organizations Supplier Innovation or indicators aligned to Sustainable Development goals (carbon emissions; ESG; inclusion) 

There are three pillars to achieve these results:

Efficiencies – internal processes, demand drivers, procurement practices, specifications 
Productivity – inventory practices, specifications, share best practices across organisation, category management 
Satisfaction – Quality, value contribution / value-to-price, leverage entire organization’s spend 

To understand the status quo and identify measures of improvement, companies use fairly readily available benchmarks to measure savings and productivity.  For other metrics, it requires additional maturity with more specific approaches. Some existing purchasing performance management platforms, such as Per Angusta, Sievo or Orpheus, provide the necessary approach and tools for analysis, reporting and collaboration specific to Purchasing Performance.  Source-To-Pay platforms such as Ariba, Ivalua, Corcentric, Coupa, Jaggaer and others also provide dedicated modules and advanced analytics to support Strategic Sourcing management. 

Synvance

Synvance supports customers comprehensively in the context of Strategic Sourcing, Sourcing, Procurement, according to the principle “Enhance your Present, Inspire your Future”.  In line with the needs of a company, improvement opportunities are identified and implemented, and digital solutions are analysed for their fit to the company as well as integrated where reasonable. 

VP – Synvance Europe

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