Procurement Dashboard – Everything a Procurement Professional Should Know
For a company that has to deal with procurement at every moment, a procurement dashboard is a very important tool. Without the procurement dashboard, the company won’t be able to track every acquisition process done by either the company’s procurement team or by consultants.
For this article, we are going to define what a procurement dashboard is, what it can do for your company, as well as the four professional procurement dashboards available for companies that need assistance in keeping track of the procurement transactions.
Once you’re done reading this article, you should have a good idea of what procurement dashboards are and what to do with them if your company or organization decides to invest in them.
Whatis a Procurement Dashboard?
When driving a car, the driver’s eyes are not just fixated on the road, but on the driver’s dashboard as well. When one looks at the driver’s dashboard, one sees a lot of information regarding the condition, speed, and quality of the car. That, in turn, also has the same effect on procurement.
The procurement process is filled with data; so much data that it also becomes very difficult to keep track of them all. That is why procurement systems are gaining popularity nowadays; with these programs, a procurement team no longer has to carry the burden of keeping and recording each bill, contract, and/or invoice that is related to the procurement of raw materials or services. With the procurement system, all of this vital information can be stored in a company or organization’s data system. Or, as most of the advanced users call it, the cloud.
But data can only be stored in these data banks. There is no way for a person to actually check how much data is stored unless they are manually counted. Since data is next to impossible to check without a proper program or system, this is where the procurement dashboard comes in. Most procurement systems come in with their own innovative procurement dashboards, but each of them has its own data and system of providing information to the procurement manager.
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The Five Important KPIsNeeded for Procurement Dashboards
In most procurement dashboards, KPIs are a must in order to establish the type of information one wants to get from the procurement dashboard. With the help of these KPIs, the company’s procurement department can start working on what to improve when they start creating a procurement plan for the company.
These KPIs are often taken for granted, but we at Procurement Tactics believe that these KPIs are very important to take note of. These KPIs will determine exactly what the procurement team needs when they start the procurement process.
Each of these KPIs is but a small fraction of what the Negotiation Gamechanger can teach you. Our classes are made to help the modern procurement manager in taking charge of a world where procurement means everything for a company’s growth and survival.
So without further ado, it’s time to take a look at the five important KPIs needed for procurement dashboards:
1. Compliance Rate
This is a procurement KPI that is crucial when it comes to determining the final quality of a product. It measures the percentage of products received from suppliers that do not meet the compliance specifications and quality requirements. The supplier defect rate is more critical in some industries that have high-risks and multi-tiered supplier bases like the aerospace and defense or the automotive.
Tracking your different suppliers’ defect rates and breaking them down into defect types will provide you insights on which supplier is more performant and reliable than others, and what type of errors are done.
2. Purchase Order Cycle Time
The purchase order cycle time is a procurement KPI that covers the end-to-end ordering process, from the moment a purchase order is created to the order approval, receipt, invoice, and finally payment of the order.
It focuses on the order and does not include the creation and delivery of the product or material itself.
3. Supplier Quality Rating
The quality rating is one of the supplier performance metrics critical in evaluating present as well future relationships with suppliers. If the designated supplier continuously delivers a lower quality score, then their status may be downgraded, or corrective measures implemented until issues in the supply chain are resolved.
For example, if the supplier availability was low, and you cannot rely on their stock, your business can, consequently, suffer due to a lack of products. Therefore, it’s only important that a potential supplier should have a great supplier quality rating in accordance with your company’s procurement dashboard.
4. Supplier Availability
Supplier availability is a procurement KPI that refers to the number of times goods were available on the supplier’s side, or to the number of orders placed with the supplier. In an era of fast-changing consumer habits, where the lines between different channels are blurred, and where mobile-commerce, online purchases, in-store consumer-specific marketing all merge in one retail experience, it is important to manage suppliers as efficiently as possible to guarantee the availability of stocks. By monitoring the evolution of your supplier’s availability of stocks, you know the degree of reliability you can place in them.
5. Supplier Defect Rate
This is a procurement KPI that is crucial when it comes to determining the final quality of a product. It measures the percentage of products received from suppliers that do not meet the compliance specifications and quality requirements. The supplier defect rate is more critical in some industries that have high-risks and multi-tiered supplier bases like the aerospace and defense or the automotive.
Tracking your different suppliers’ defect rates and breaking them down into defect types will provide you insights on which supplier is more performant and reliable than others, and what type of errors are done.
Frequentlyasked questions
+ What is a procurement dashboard?
A procurement dashboard is a part of a procurement system where various information regarding a company’s procurement process can be seen.
+ What makes the procurement dashboard?
Most of the time, the procurement dashboard is created by the automated procurement system itself after calculating all sourcing processes.
+ Who is in charge of the procurement dashboard?
The procurement manager or procurement head is the one who checks the procurement dashboard at all times.
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