The 5 Steps of a Procurement Performance Improvement Plan

Jul 18, 2022 | Leadership diaries

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Jul 18, 20223 min read

Assess current performance, define objectives and metrics, develop a plan of action, implement and monitor, continuously improve. Use data and analytics for identification and measurement of progress. A continuous process to ensure desired results and effectiveness over time.

Implementing a procurement performance improvement plan can be a complex and multifaceted process. Here are some key steps to consider: 

  • Assess current procurement performance: Begin by evaluating your company's current procurement processes and identifying areas for improvement. This can be done through surveys, interviews with stakeholders, and analysis of data such as spend, supplier performance, and cycle times. 
  • Define objectives and metrics: Once you have a clear understanding of the current state of procurement performance, define specific objectives and metrics that will be used to measure progress and success. For example, you may aim to reduce spend on a specific category of goods or services, or to improve supplier on-time delivery rates. 
  • Develop a plan of action: With your objectives and metrics in place, develop a plan of action that outlines the specific steps that will be taken to achieve the desired improvements. This plan should include details such as who will be responsible for specific tasks, timelines for completion, and any necessary budget or resource allocations. 
  • Implement and monitor the plan: Once the plan is developed, implement it and begin monitoring progress against the established metrics. This can be done through regular reporting and reviews with key stakeholders. 
  • Continuously improve: Continuously monitor and evaluate the procurement performance improvement plan and adjust as necessary. This will help ensure that the desired results are achieved and that the plan remains effective over time. 

Here are some examples of companies that have successfully implemented procurement performance improvement plans: 

In 2018, GE implemented a procurement performance improvement plan that aimed to reduce spend on indirect goods and services. By leveraging data and analytics, the company was able to identify and target areas for savings, resulting in a 20% reduction in indirect spend

In 2019, Cisco implemented a procurement performance improvement plan that aimed to improve supplier on-time delivery rates. By working closely with suppliers and implementing new processes, Cisco was able to improve on-time delivery rates by 10%. 

In 2020, Dell announced a procurement performance improvement plan that aimed to increase the amount of spend on diverse suppliers. Dell set a goal of increasing spend on diverse suppliers by 30% within the next three years and implemented various initiatives to support this goal. 

In general, it's important to remember that a procurement performance improvement plan is a continuous process, and it is essential to monitor the progress and adjust accordingly. Additionally, it's important to use data and analytics to identify areas for improvement and measure progress. 

FactWise S2P optimizes procurement for product manufacturing companies globally. The comprehensive procurement platform provides transparency and insights to leaders, automates processes to improve efficiency, and drives bottom-line impact by unlocking savings potential.  

About the Author

Stawan is the founder and CEO of FactWise. Before founding FactWise, Stawan was the NA TMT-Procurement Leader at McKinsey. Passionate about procurement, Stawan has 15 years’ experience in enabling clients of all sizes to achieve business impact via procurement.


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