🎣 The Catchup

Dear readers,

I had to get my toddlers out of the house this weekend… My wife needed some quiet time to get some work done. So, off I went (with boots) on an undefined adventure with the kids (I had no clue where I was going when I left the house).

I remembered that you can go see the cows that supply the milk for the local cheese shop close to home. BINGO!

That wasn’t long enough so I stayed in the theme and we went to an equestrian school 30 mins away. We watched the students ride for 20 mins before the kids got restless… Hmmm… What’s next… “The library!”, my daughter says.

Up to this point, boots had been the right choice… I just didn’t know if bringing said boots into the library would be appreciated at this point 😅

I cleaned the kids up as best I could and gambled on a trip to the ‘hall of silence’… Best thing ever. The kids were excited to read and that killed the remaining time and then some…

So that’s my message today… If you haven’t been to a library in a while. Do it. It’s a treasure trove.

While there, I started looking up old and obscure Procurement literature… Hence tonight’s Sunday Night Note… The question I was trying to answer:

Do we still measure the same Procurement performance Key Performance Indicators (KPIs) as we did in the 90s? Or have things changed drastically?

Enjoy and have a great week ahead.

Best,

Joël

P.S. In case you missed it, here was my most popular LinkedIn post of the week:
If you’re planning on putting out an RFP right before the holiday break... Don’t

🌙 Sunday Night Note

In 1997, Center for Advanced Purchasing Studies (CAPS) (now named the Center for Advanced Procurement Strategy) published the results of a study called Measures of Purchasing Effectiveness that had 3 objectives:

1. Determine what performance measures are considered to be of high value to CPOs and CEOs

2. Determine what measurements actually are used by CPOs (vs. what they say is important).

3. Establish what guidelines are used by CPOs in considering the needs/uses of performance effectiveness measures.

They ran a survey with 285 American and Canadian CPOs (219 manufacturing firms, 66 service firms) to find out.

• For #1 and #2, they compiled a “menu” of the 90 key performance indicators used by these 285 firms to measure Procurement function performance.

  • These 90 were sorted into 6 categories:

    • Cost Effectiveness

    • Organization

    • Developing Supplier Base

    • Managing Supplier Base

    • System Utilization

    • Overall Performance Evaluation

• They asked each CPO to answer:

  • Whether or not they used the measure in their company (Yes/No)

  • To rank all the measures in order of perceived importance (whether used or not)

• They then created a Measurement Assessment and Reality (MAR) measure which combines the relative importance and usage together into a global importance score for each measure.

  • For example, for all the measures deemed important (e.g. Top 10), the ones that are actually used by many respondents were ranked higher than those who were not.

It’s fascinating to go through the data… Why?

Although some of the measures are laughable (e.g. % of Procurement department using PCs and workstations 😅), the vast majority are still very relevant today.

For example, many of the themes in the 2023 Deloitte Global CPO Survey bleed through the list of KPIs:

• Driving operational efficiency

• Enhancing supplier diversity (ESG/CSR)

• Digital Transformation (although the focus is on older technology…)

• Improving margins via cost reduction

• Enhancing risk management

• Etc.

In fact, here’s the conclusion for objective #3, verbatim from the study:

So what are the takeaways here?

• Getting Procurement right in an organization is ALL about context.

• Procurement is easy to learn, difficult to master

  • As a function, the business best practices were established long ago... They’re “done”. No need to reinvent the wheel…

  • However, applying the right combination of best practices in a given context? That’s the game. It’s essentially golf…

• The people. THE PEOPLE are what make the difference. Getting a team of “good golfers” together that also understand where today’s tech is going is the toughest part of putting together a leading Procurement organization.

Now, for the doubters out there, I’ve got a surprise for you. I cleansed and compiled the 1997 report data for you… You can use it in 2 ways:

• Satisfy your curiosity

• Use it as a ‘checklist’ for your own Procurement function → “Are we measuring all the measures considered important in 1997?”

As readers of this newsletter, you get access for free. Just use code PURE100 at checkout.

Let me know what measure you found most surprising in the comments online.

💭 Quote of the Week

This week’s quote is interesting because we hear “what gets measured gets managed” so often… But that’s not actually the full quote! And the full quote is so. much. better.