Discovering the Compass for Purchasing's Journey!
In the dynamic world of business, companies are constantly seeking ways to optimize their operations for maximum efficiency. One such area is the supply chain, where adapting to regulatory changes in global markets can make all the difference.
Another crucial aspect is managing surplus chemicals. By transforming idle inventory into cost savings and revenue, companies can boost their bottom line significantly.
But what about the Procurement team? How can they contribute to a company's growth and development? To answer this question, it's essential to first identify the Procurement team's North Star Metric(s).
The North Star Metric (NSM) is a single metric that captures the core value a product or service delivers to customers. For a procurement team, this could focus on a single key performance indicator that reflects the core value delivered by procurement, such as cost savings achieved, supplier performance, procurement cycle time, or purchase order accuracy. It serves as the guiding measurement to align the team’s efforts with strategic goals.
The potential Procurement North Star Metric(s) could be a subset of the overarching business North Star Metric and may focus on managing costs and delivering savings, ensuring product quality and sustainability, and managing and improving supply chain performance and delivery.
However, to successfully implement a North Star Metric, a few factors must be considered. The team's North Star Metric should lead to revenue, reflect customer value, and measure progress. To define the North Star Metric, prioritize a list of essential factors to the business's functioning, essential factors the Procurement function does for the broader business, and the KPIs and metrics that measure these factors.
Cross-silo relationships are also important for Procurement to achieve growth and development. A sturdy rocketship (people and tech) is necessary to keep the North Star Metric on a steady growth path. Modern technology is required for Procurement to follow up on sub-metrics, increase visibility, and report progress.
But what about the people? Employees may reject the North Star Metric if they must change their behaviour significantly. Leadership should understand the role Procurement plays in obtaining revenue growth and enhanced customer value. A company culture and infrastructure that caters to the North Star Metric is essential for its successful implementation.
In the electronic OEM industry, where rising expenses from non-compliance with constantly changing global regulations are a significant challenge, a well-defined North Star Metric can provide a clear direction for the Procurement team. A Masters in Management Information Systems can enhance Supply Management Strategies, providing the necessary tools to navigate these complexities.
Examples of North Star Metrics include Facebook's "monthly active users", Medium's "total time reading", and Airbnb's "nights booked". For Procurement, these could translate into cost savings, improved supplier performance, shorter procurement cycles, and increased purchase order accuracy.
In conclusion, adapting to regulatory changes, managing surplus chemicals, and implementing a well-defined North Star Metric are key strategies for optimizing a company's supply chain and Procurement function for maximum efficiency and growth.
