Executive summary

How do you measure up?

By Andrew Likierman

Moving the purchasing function from an operational to a strategic resource is never easy, but the task is even more difficult without the right performance measures. In this article, Likierman, a professor at London Business School, looks at how performance measurement can support the CPO's authority.

He considers three different roles – procurement expert, head of function and member of the senior management team – and maps them against three scenarios: compared to plan/objective, compared to what others are doing, and compared to what might be possible. Of these, the latter is the most important and the most outward-facing, but it is also the toughest to measure.

Questions designed to test this include:

What might have happened if procurement had not intervened?
How well trained are procurement staff compared to the best in the field?
How far has the CPO made other management team members aware of what procurement can offer?
Is the CPO linking his or her function to the corporate responsibility agenda?

Sticking to more traditional measures that are simple and known may be tempting, but they limit the role. It's up to the CPO to force the pace.

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