What is the purpose of "Management of Measures" in procurement?Modern corporations plan their corporate goals for each fiscal year and break down these goals into individual objects. Sometimes, this is done using so-called scorecards or balanced scorecards. The targets are represented using key figures that need to be achieved by the different corporate units (i.e. the individual departments or divisions).
The purchasing department also derives its goals from the company’s overall goals. For example, the purchasing goals (e.g. cost savings, quality and compliance guidelines) are provided to the purchasing department and its management by the financial department (e.g. on a specific procurement scorecard).
The management team, however, not only relies on the provision of goals; it also wants to know how the individual departments, employees and teams plan to accomplish these goals operatively.
Measure management serves precisely this purpose: measures or initiatives are meant to help operationalize target achievements and to manage these in a more precise and prompt manner. It is no longer about simply “hoping” that goals will be reached; the aim is to be sure of which goals are at risk and which will most likely be achieved (risk mitigation). Moreover, it is also important to see with which levers (type of measure) the employees responsible employ in which time period to fulfill the target achievements.
For this, modern measure management uses special tracking software, such as the InitiativeTracker by Orpheus, in order to break down set goals into concrete activities throughout the corporation as per the same logic and temporal screening, as well as to plan, operationalize and continuously update the target achievement status. This type of initiative management software can plan budgets for this purpose, and supports rolling forecasts just the same as the entry (or automated update) of actual figures.
The individual measures in the purchasing department or from the supply chain are fundamentally nothing more than projects to increase efficiency. Tracking the projects involves the use of Degree of Implementation (usually 5-Stage Degrees of Implementation, see Measure management using Degree of Implementation) with trim work flow procedures in order to implement approvals by means of management. Measure reporting is usually a part of the standard management reporting undertaken by the finance department. A joint study conducted by Orpheus and EY looked at the integration of purchasing and finance in more detail. Study: Procurement Performance Management today
Read blog articles about spend management, initiative management and data management in procurement, or other articles from our experts.