Despite its critical role, as we know, procurement is often undervalued within organizations, viewed as just an operational necessity rather than a strategic partner. According to Gartner's Procurement Competencies Survey, only 41% of senior executives regard procurement as an operational partner, and a mere 3% view it as a thought leader. In order to counter this misperception, procurement leaders must develop and showcase compelling performance metrics that reflect their strategic contributions.

The importance of strategic metrics

Traditional savings-focused dashboards often reinforce the outdated view of procurement as a cost-cutting function. In order to demonstrate its broader value, procurement must adopt metrics that align with organizational priorities and communicate its role as a strategic enabler. These metrics should:

  • Reflect procurement's impact on competitive advantage and revenue growth.
  • Showcase contributions to innovation, sustainability, and risk mitigation.
  • Highlight procurement's role in enabling efficient and effective operations.

Metrics that matter according to key stakeholders

The expectations of each stakeholder vary with respect to procurement. Tailoring metrics to their interests is essential to gain the recognition and support needed as an area. Below is a list of the most relevant metrics for each stakeholder level:

  • Executive leadership (CEO, CFO, Board):
  • Competitive advantage: Benchmarking price performance versus industry best practices.
  • Revenue impact: Quantifying revenue enabled by procurement activities.
  • Financial contributions: Measuring year-over-year savings contributions to earnings per share (EPS), cash flow, and economic value added (EVA).
  • Internal business units and functional stakeholders:
  • Strategic partnerships: Frequency and effectiveness of procurement's engagement with internal customers.
  • Savings ROI: Returns on investments in procurement initiatives.
  • Productivity gains: Savings generated through efficiency and innovation.
  • Procurement staff and suppliers:
  • Internal team metrics: Including leadership bench strength, supply continuity, and performance against strategic goals.
  • Supplier metrics: Tracking supplier diversity spend, innovations implemented, and satisfaction levels.

4 Keys to creating efficient procurement dashboards

Dashboards should go beyond merely tracking the achievement of objectives and instead emphasize insights and strategic contributions to the procurement process. Here are some tips on how to create effective scorecards:

  1. Understand stakeholder priorities: Collaborate with internal and external stakeholders to identify their procurement-related objectives and concerns.
  2. Select strategic metrics: Focus on those metrics that demonstrate high-value contributions, such as risk mitigation, sustainability initiatives and support for innovation.
  3. Ensure clarity and relevance: Present data in a clear and concise manner that directly addresses stakeholder needs.
  4. Leverage technology tools: Use advanced analytics tools to automate data collection and visualization offered by purchase order software such as ControlHub, ensuring that dashboards are kept up to date and accurate. 

The importance of strategic communication in procurement

Changing how the procurement area and its contribution to the company is perceived requires consistent and strategic communication. Procurement managers should focus on:

  • Share success stories: Highlight specific examples of procurement's impact on organizational goals.
  • Engage in cross-functional collaboration: Build relationships with other departments to reinforce procurement's role as a strategic partner.
  • Continuously evolve metrics: Regularly update metrics to reflect changing business priorities and market conditions.

Conclusion

Demonstrating procurement's value requires a strategic shift from traditional cost-focused metrics to a broader set of strategic performance indicators. The recommendations for procurement managers are: aligning metrics with stakeholder priorities, leveraging technology for dynamic dashboards, and effectively communicating achievements. This approach positions the procurement area as a thought leader driving innovation and strategic growth into the organization.