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Navigating the Future: Old vs. New KPIs in GenAI-Driven Procurement by Supernegotiate

Writer's picture: Gaurav SharmaGaurav Sharma

In continuation to the last post on changing dynamics in the Procurement world, here are some unconventional KPIs to monitor the effectiveness of Procurement in 2024!




1) Old: Cost Savings


New: Budget released and given back by Procurement to P&L statement at the end of each quarter. Not only does this metric ensure no budget creep happens, but it also ensures that the impact of negotiations and cost saving is directly translated into P&L improvement (the north star in Procurement cost savings!)


2) Old: Adoption of Digital Tools:


Measuring adoption via user logins is outdated. People can step in and step out and not care about the tool at all. It's funny when big change management programs are rolled out to push for the adoption of tools. If a tool is useful, it will gain adoption. Stop pushing useless tools.


New: No. of Predictive insights delivered.

With GenAI being now integrated with enterprise data, Procurement will become tool-less (hard to grasp? Look for my next video on this). Logins into platforms and visualization dashboards will start diminishing rapidly now. Rather, measure predictive insights being delivered by your tool. Set a 30% threshold, to begin with (30% being predictive and 70% being just simple past trend visualization)


3) Old: Supplier Management:


OTIF is 1980s. Move to a better world where you don't have to check the homework of your supplier. Ofcourse you need visualization on lead times but it can not be performance measure.


New: Supplier Innovation Contribution. Product and Process innovations were jointly worked on by you. An important part here is Business Process Innovation as well.


4) New : Sustainability Index:


Start measuring your suppliers' carbon footprint and emission reduction. H2-2024 will force you to tell your investors what is your net emission given your procurement strategy and what the cost will be if the vendor share is to be rebalanced to reduce emissions by 3%.


Dont wait for this question; start your preparations now!


5) Old: Risk Management:


Again, most of these reports are generic, opinion-based, action-less and text-heavy. The red, amber, and green don't force anyone to take a proactive action


New: Dynamic Risk Modelling:


Using the spend data and supply chain data, ongoing and planned sourcing events should be modelled (simple) to assign high and low-risk sourcing lanes and events! Showstopper events should be codified, such as production stoppage possibility, stock-outs, single source spend increase, budget spending, vendor concentration etc. should be modelled and monitored daily using real-time data. Recommendations should be made by the Risk model to de-risk your "Portfolio". (See your stock management dashboard and take inspiration from there)


6) Old: Cycle Time

The standard PR-PO conversion time is ineffective.


New: Automation Index:


What % of your PR-PO processes are automated. Aim for 85%.


Ask Supernegotiate to explain more and give you a blueprint to implement these

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