There’s nothing like tracking how much money is lost though non compliance of agreements to focus everyone’s mind. Working within the arrangements that have been put in place is critical to ensuring that you benefit from cost and purchasing management reviews, indeed the level of compliance we report back to clients at each supply audit is an indicator of the level of buy in from stakeholders throughout the business.
Below are the 5 key measures which, in our experience over the last 12 years working with a whole range of clients, you should use to measure the impact of your purchasing function:
1. % compliance to agreed contracts
2. Savings
3. Cost of any non compliance
4. Stakeholder satisfaction
5. Expenditure under review/contract
The key is to have a number of priorities that end up achieving the goal of the Cost Review. One of the added value elements of our work is delivered through providing these measures on a regular basis.