Purchasing and Procurement
Ensuring timely and cost-effective input of resources for better performance
In the Purchasing and Procurement decision area, managers must balance input costs with the production outputs required to satisfy customers. In the short term, decisions must include how to respond to shortage problems, price increases, and delivery delays. Long-term decisions include determining your supplier strategy.
These decisions require information on specifications, procurement tenders, price quotations, and vendor performance assessments. You cannot make the necessary purchasing trade-offs without access to these information sweet spots.
With the Purchasing and Procurement decision area, you can set planning goals and scorecarding metrics for these elements to improve performance management:
- Purchase price/unit ($)
- Reject rate (%)
- Supplier timeliness, discount, and performance rating ($ and %)
- Actual and quoted lead days (#)
- Contract quality, quantity, and remaining (#)
- Purchase order units and costs (# and $)
- Credit rating (#)
Most importantly, you can analyze these goals and metrics by a number of dimensions to find the hidden gems in the data:
- Fiscal month / year
- Raw material
- RM suppliers
- Shipment type
- Vendor status
Using the Purchasing and Procurement decision area
You set targets based on your goals and metrics in Purchasing and Procurement. You monitor your success by looking at how you measure up against your targets. Further, you dive into your results to find out more about these elements driving performance management.- Purchase price/unit ($) : Should we tie up cash in inventory to buffer against recent problems in delivery?
- Contract quality (#) : How do we balance the savings and/or better quality from exclusive supplier agreements against the risk of creating unacceptable dependencies?
- Performance rating: Who are our top suppliers in terms of reliability, price, quality, and timeliness of delivery? Who are our under-perfomers?
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