The Six Most Common KPIs for Procurement

by Lourdes Coss, MPA, CPPO

An important aspect of transformation is setting and achieving goals. Whenever an organization establishes a goal, it should also implement a process to manage it.  That means that you need to measure progress towards the target.  Transformation is not a pre-requisite to establishing and achieving goals.  Organizations do this as a matter of practice, particularly those that want to continue to improve.  

Goals should be supported by a process that informs leadership of the progress towards goal achievement.  It is necessary to establish a way to measure the gap between the current situation and the desired state for a specific objective.  Keeping track of the progress is essential because it is hard to achieve what you don’t track or don’t measure.  

To track progress towards goals, organizations establish Key Performance Indicators (KPIs).  KPIs are quantifiable measurements that help procurement leaders determine how well their organization achieves strategic and operational goals. These measurements are specific to areas relevant to the overall quality of a procurement’s operation.  Each KPI requires the collection of appropriate data pertinent to the KPI that supports the goal.  In some organizations, KPIs’ reporting has been institutionalized across the entity to measure the overall performance and determine alignment with its operational and the strategic objectives established by the governing body or top executive.

When establishing KPIs, the leader must take into consideration the availability of data.  If data is not available, the leader should delineate the method or process for making the data available in the future.  When information is not accessible to establish clear targets, the leader’s experience can help him, or her make educated guesses.  As data becomes available, the leader can adjust the goals.

The KPIs’ objective is to track the progress made by the organization towards the achievement of established goals.  KPIs are also an essential aspect of managing change. Developing indicators that help identify the gap between the current and desired states helps provide a clear picture of any strategic efforts.  

In procurement, there are some KPIs that are most common across many organizations.  These consist of speed, cost, quality, competition, compliance, and customer service.  Some organizations may consider compliance, competition, and customer service as part of quality.  But all of these are relevant in one way or another to each procurement organization. If you are embarking on a journey to measuring performance, here are some key performance indicators that I found worthwhile capturing.  

  1. Speed.  Speed generally refers to the cycle times for the different procurement methods.  Cycle time is an important one because it is the one about which most end users complain.  If we look objectively at speed, we can understand why it is one of the most common end-users’ complaints.  When procurement can provide more predictability on the cycle time of the procurement process, the conversation changes.  Predictability implies that there is some consistency, and consistency inspires a level of trust.  For planning purposes, it is vital to understand how much time the procurement process will take.  This term needs to be built into the project’s timeline so that the end-user can manage expectations and implementation.  Part of the end-users frustration is the inability to anticipate the timeframe that it must allow for the procurement process.  I acknowledge that sometimes the issue is a break in communication.  One thing to also consider under this KPI is whether the procurement was planned or unplanned.  It would be hard to meet a goal when you react to procurements that you didn’t know were coming.  It helps to have a procurement plan and have open lines of communication with your end-users.
  2. Cost.  Cost savings and cost avoidance is a measure that procurement generally track.  In entities where the procurement department reports up to finance, keeping track of cost savings and cost avoidance becomes necessary.  Some organizations keep track of savings to determine the return on the investment of having a procurement team.  This KPI is a good one to use when seeking funding for training, personnel, technology, and other resources.  When the story is favorable, it provides for great marketing.
  3. Quality.  I associate quality with the solicitation document and the process.  The data collected seems more indirect.  There may not be a piece of data that will indicate quality.  Instead, there are a couple of factors that have an impact on quality.  Personnel professional development and training is one of them.  The better-trained personnel is, the higher the quality of the documents should be.  The quality of solicitation documents can be valuable data.  The number of addenda issued to correct a solicitation document after it is made available to the public indicates poorly constructed solicitation documents. There are exceptions to every rule, and there are projects that present unique circumstances.  If there is an excessive number of addenda, it is a sign of a quality issue.
  4. Competition.  The level of competition may indicate a quality issue, but it is also an indicator of other problems.  If your agency’s goal is to receive at least three bids, proposals, or responses on average and your KPI shows a lower number, it might be an indication of some issues that need to be analyzed.  
  5. Compliance.  Compliance may relate to individual policies specific to the agency.  If your agency wants to measure compliance with specific regional goals, you can establish KPIs under this category.
  6. Customer Service.  This one is generally measured based on customer service surveys.  It may not be a monthly KPI.  Instead, reports can be quarterly, semi-annually, or annually.  The regular KPI report may not include this particular one. 

Whenever the organization goes through the exercise of establishing KPIs, collecting data, and reporting on it periodically, it is crucial not to lose sight of these KPIs’ purpose.  You should review and analyze the information so that you can adjust the strategies and tactics if necessary.  The goal is to help you achieve operational or strategic objectives.

To conclude, KPIs are a helpful tool to help manage change and achieve goals.  Being disciplined about interpreting the KPIs will also help you stay on track and determine the effectiveness of strategies and tactics. If your procurement organization is new to establishing KPIs, the ones provided in this article are an excellent place to start. 

The 3 Things You Can do to Become More Adaptable

by Lourdes Coss, MPA, CPPO

Good leaders are adaptable.  Being adaptable in a time when there is so much uncertainty has been beneficial to many.  People that have developed this skill can pivot and adjust to whatever life throws at them. There’s been no time like the present when this skill has been more valuable.  In the last several months, the value of being adaptable has been revealed to us in all of our environments, work, home, social, and even health and spiritual life. 

The Pandemic forced us to pivot in many different aspects of our lives.  It has also, to an extent, sparked our creativity in even our most routine activities and the ones we took for granted. Grocery shopping, dining out, a stroll in the park, and family time have taken a new meaning in many lives.  We learned to appreciate the goodness of life, as we have seen its fragility flash in front of us. It has made us realize how quickly our lives can change.

We are more aware of the value of the little things in life.  The little things that we have discovered are not so small or insignificant.  We have come to realize that what we often refer to as “little things of life” are, in fact, the essential things that bring so much meaning to our lives, like moments with family and friends.  Many crave the in-person interaction when, in the past, we probably skipped an event because of the human interaction overload.  I think that we have reached the other extreme. We now crave human interaction.  

Despite the isolation and distancing, we immediately found a way to stay even more connected.  I think that I talk more with family, friends, and colleagues now than I had in the past.  Perhaps it is the fear of isolation and the need for human connection.  Thanks to the different platforms that rapidly scaled up, many of us were able to pivot quickly.  We found ways to stay connected and even develop friendships with people across the country that perhaps we would not have otherwise formed.

On the procurement front, my colleagues have found creative ways to continue to deliver the level of service that their resources permit.  In doing so, many have discovered that physical presence in a specific site is not a determining factor to effectiveness or productivity. It’s interesting how we can adapt when the situation forces us to.  The thought of telecommuting would have been rejected by most of the government organizations immediately.  It would have been one of those “dead on arrival” ideas that an ingenious person would have brought up in a meeting and immediately rejected by many.  Every argument has its time.  The difference is that absent the current Pandemic; the idea would have been a “nice to have” pie in the sky.  It would have taken much effort to get buy-in and get used to the concept of telecommuting. 

On the other hand, the power of choice is one of the most precious things that we have.  It is what makes us individuals.  Sometimes the power of choice works against us.  Because it allows us to remain stubborn to the current circumstances or the changing environment, it provides the easy out for our fear of change and the unknown.  As long as we can choose, we can choose to do nothing.  Choice and adaptability may seem to be on opposite sides, but I don’t see it that way.  You have the option to adapt to the demands of the environment.

What makes people adaptable? Let’s start with the fact that we are all different, and some adapt to change better than others.  Whether in a crisis or a situation with a less critical change, the fear of the unknown affects some people more than others.  We all have some of that fear. So, what can we do to become more adaptable?  I have some thoughts about that.

Adaptability requires awareness and intentional action.  It requires us to recognize that we can learn new things.  We can succeed under unique circumstances if we are willing and open to new and different thoughts about “how” we approach life and the events that it presents. I believe that there are at least three things that people can do to become more adaptable

  1. Elevate your awareness. Increase your awareness level to bring your thoughts from autopilot to the conscious level.  Sometimes we create patterns and habits that are reinforced by our environment.  We get comfortable and prefer to stay in that comfort zone.  Let’s take a moment to think and challenge our resistance to change. We may see the situation differently, not through the eyes of what’s comfortable but as an opportunity to expand our range of knowledge.  It will, of course, require the discomfort that comes with learning something new.
  2. Embrace the learning opportunity.  When we are open to new experiences and learning, there is a discomfort that comes with growth.  If we embrace learning, we will identify the feelings associated with the learning process.  As we become familiar with those feelings, we may be better able to cope knowing that those feelings are temporary.
  3. Become an advocate for change.  Advocating for change will help you be more open to taking risks. Taking some risk will open you to the opportunity to explore new ways of doing things.  When you encourage others to change, it helps you be more open to taking risks in unfamiliar areas.  The ability to take detours in your journey may bring you more opportunities, but you must be willing to take the risk.  

To sum up, adaptability is a necessary quality of a leader. We can plan for the future, but we cannot predict it.  We should remain flexible to the detours that we encounter in our journey in life, whatever that might be.  The one sure thing is change.  To the extent that we remain flexible and adaptable to whatever comes our way, we will be able to overcome any adversity or challenge.  We should see new circumstances as opportunities for the future.

3 Elements to Create a Collaborative Culture

Do you know what makes a culture? There are reasons why you should consider it to  develop a collaborative environment? Several factors make up cultures, such as habits, preferences, styles, unwritten codes of behavior, etc.  One thing I learned while leading transformations was that it is the leader that sets the tone. When I hear the saying, “culture eats strategy for lunch,” I can relate. When strategies and culture do not align, change may have a short life span. 

The leader sets the tone and that tone trickles down to everyone in the organization.  People have different personalities. Each person will contribute his/her character to the composite of the organization’s culture.  If it is a positive tone, people will be inspired to collaborate, care, and add value to each other.  The people will make this part of their daily behavior.

On the other hand, if the tone is of distrust and negativity, It will also trickle down and may be perceived as a toxic culture.  The culture of an organization impacts its customers, both internal and external.   People tend to give what they receive; therefore, this is one reason why it is vital to treat employees the way we want them to treat customers.  

Many organizations treat the symptom by providing customer service training.  Although it is a valuable investment, in some cases, not knowing how to treat customers may not be the cause of substandard customer service.  I worked for an agency that had the worst customer service record in the organization.  As a new hire, my task was to turn the organization around and fix the customer service issue.  After brief conversations and observations, I concluded that the customer service issue was merely a symptom of a more significant problem.  The root cause was the leadership style and the negativity that permeated throughout the organization.

Resolving the customer service issue required a fresh start with a new leadership style, shielding staff from the negativity that flowed from higher levels in the organization, and training.  The change in leadership gave everyone the incentive to recommit to their role and approach daily situations with the same consideration and care they were now receiving.  Changing culture is not a quick process.  It requires time for each individual to experience and adopt a new set of unwritten rules for behavior that comes from appreciation, choice, and communication.

1-Appreciation: One way to start changing a toxic culture is by helping people feel appreciated and supported for their work. Regardless of whether it is their responsibility to perform their respective roles, people need to feel that they contribute to something bigger than themselves and their contribution matters.  In his hierarchy of needs model, Maslow identified the need to belong and be appreciated as every individual’s psychological needs.  Naturally, individuals are happier about their environment if it meets their psychological needs.  

Coming up the ranks, I encounter environments where the person in the leadership position offered a constant reminder that everyone’s job security is in the hands of management. The threat to stability puts at risk a person’s means for fulfilling his/her basic need for food and shelter.  Fortunately, many organizations understand the relationship between treating people with respectful appreciation and customer service quality.  When people are happy, the chances for better customer service increase; it starts with the leader.

2-Personal choice and commitment:  Everyone must see something in the leader or environment that compels them to recommit to their job. Each person has a choice. It is the leader’s responsibility to gain the trust of the team.  Each person’s commitment to the group will have a positive compounding effect and help change the culture.  It is a one-event at a time process.  It takes time to change the culture of a government organization.  I benefited from being a new sign of hope for the team.  I didn’t expect to see immediate changes, but I offer them hope for a better future and a new organization.  No one will change on command; it is an individual process, and it happens only if the individual chooses to do so.  Getting buy-in is vital to the transformation process.  

There are a few examples of organizations that have a collaborative culture.  One of them is Chick-A-Filet.  Just visit their drive-through and experience a happy culture.  I don’t usually eat fast food but became curious after hearing a speaker talk about the company’s leadership and their effort to create a collaborative culture. 

3-Communication: Communication is essential in any change process, especially when you strive to have a culture where collaboration is at the center of all success.  Communicating freely in all directions within the organization is necessary to develop an environment of cooperation, trust, and excellence.  It is an excellent idea to provide communication training to make interactions more significant, given the diversity of personalities and backgrounds.  When people understand how to communicate more effectively with others, they can develop better relationships.  One way to help people identify how to communicate with others with different personalities is to offer them the opportunity to take an assessment, whether DISC, Whole Brain, or any other.  The appraisal’s objective is not to pigeon-hole the person into their style, but to offer recommendations on how to best blend their style to more effectively communicate with people with a different personality profile.

To summarize, culture consists of many factors, including personality styles, leadership cues, and the overall environment created overtime.  To change the culture, it takes time and intentional effort by the leader and every individual that makes up the organization.  Showing appreciation for work performed goes a long way to creating a positive environment, which then translates into the service provided to its internal and external customers. Changing the culture also requires the individual commitment of those in the organization, including leadership. Finally, communication is an important factor throughout the change process and maintains the level of collaboration desired by the organization.    The team should communicate in all directions to increase the effectiveness of the team and benefit the organization. Communication is the door to change and, therefore, should be consistent and frequent.

The Principles of Growth and Procurement Transformation

Transformation and growth go together, and awareness is a prerequisite for development.  I found this to be true throughout my career in public service.  Both personal and organizational development requires the understanding that there is the potential to expand our capabilities and perform at a higher level.  We may have a natural talent in some areas.  But talent alone does not determine the level of performance or success. It is necessary to cultivate and develop those talents.  We all have high potential to become more and do more, but we each choose to use that potential.  I read in several sources that we use anywhere between 10% to 40% of our potential. I can only imagine how much more we would accomplish it we use another 20% of our capabilities.  It is a daily choice that we make to set our priorities and determine how we spend our time.  It is easier to go about life underperforming than elevate our game and take a more challenging path, a path that can lead us to achieve extraordinary things.

Some of us may have lofty goals of making a mark in the world by leaving our leadership legacy for our family, colleagues, and our profession.  Some of us want our existence to matter by making the contributions that future generations can enjoy.  If our goal is to leave a mark in the world, we need to stay relevant, and to remain relevant, we must continue to evolve into the best possible version of ourselves. But growth is change, and change is uncomfortable. 

“Insanity is doing the same thing over and over and expecting different results.” — Albert Einstein

I led a mastermind with a group of procurement professionals. A mastermind is a group of like-minded people who come together to share and discuss ideas and concepts. The book that we studied was “The 15 Invaluable Laws of Growth” by Dr. John C. Maxwell.  As I gathered with colleagues and friends, it is refreshing to learn that many want to continue to learn, grow, and make a difference.  We all struggle with the day-to-day and perhaps mundane tasks that often get in the way of our growth.  Sometimes we wonder why we’re not further along in our career or other aspects of life.  I think the answer to that is in our daily schedule, our habits, and routines.  The choices that we make today reveal the results tomorrow. 

The reason these are laws is that they apply in every situation. I am now putting this book in the context of team transformation, and I believe that these laws are applicable based on my experience. There is a reason why they are considered laws. The awareness step always preceded any transformation plan, at least, those I led.  It was necessary to assess and take inventory of the conditions and circumstances that led the team to the present state.  Reflecting on the past helped take stock of the present conditions of the team and their performance.  This reflection and observations helped identify the gap between the vision for the future and the current state.  Understanding the gap helped me develop a path forward.  The purpose of the goals for growth was to help the team become people who could achieve the vision.  Change, of course, was necessary.

In my opinion, John Maxwell’s laws of reflection, intentionality, and awareness are present in the initial assessment exercise.  If we want to grow, it is necessary to take inventory of where you are, determine where you want to be, and be intentional about taking steps that move us towards the desired state. The law of the mirror comes into play when the organization decides to invest in the procurement team’s transformation. From the organizational perspective, those making the decision see sufficient value in the procurement function to invest in it.  

Interestingly, these laws apply both at the group level and the individual level. Each individual in the organization needs to self-assess where they are and where they want to go.  Once they identify the gap, they can design their growth journey.  Individual awareness goes beyond professional goals.  Taking a hard look at themselves in every aspect of their lives is ideal.  Understanding where we are is vital because we cannot change what we don’t know is broken or no longer serves us. Having awareness is the first step, but we must also take action. Action has to be very intentional to move us in the direction of our vision for the future.  

Another law that I found revealing was the law of the environment.  I can relate this law to the culture of the organization.  The atmosphere within the team may or may not be conducive to growth and development.  In an organization, everyone influences everyone else.  When each member of the organization is at a higher level of awareness and has the right leadership in promoting an environment of collaboration, that environment will be conducive to growth.   This particular law says that “growth thrives in conducive environments.” We don’t select our co-workers, but a team environment can make change possible. If the people around us are on a growth journey, the chances for the team’s collective growth are more significant.

We see the law of the rubber band in the tension created by growth.  Change is difficult, and development requires change.  This tension between the comfort zone and the unknown translates into growth both individually and collectively. When we stretch our abilities, we are essentially learning and growing.  Challenging situations offer us tremendous growth opportunities.  Being in that tension stage is very challenging, particularly for the most tenured staff.  Imagine going from the most knowledgeable in the room to having to re-learn your job!  Although you are always the most knowledgeable in the group, there is no tension and, therefore, not growth.  This tension stage is uncomfortable, but as the rubber band, individuals add the most value to the organization.  This tension is a good thing even though there’s plenty of frustration.  To stay relevant, one must continue to grow and change.  This tension benefits everyone both individually and collectively. 

Growth tension can be maintained when each team member remains curious about the continuous improvement of processes and finding ways to bring best practices to the operation. Staying curious is an asset that will help keep the individuals in the team growing.  An environment that enables individuals to explore that curiosity will benefit the entire organization.

We can observe on the back end of the transformation process, the laws of expansion and contribution.  The result of the growing tension is the increased capabilities of the team and each individual.  As the group expands its capabilities in an environment conducive to growth, team members will want to share knowledge, particularly with new team members.  This mindset of sharing information, helping those around you, and contributing to others’ growth also helps individuals get a more in-depth understanding of what they have learned.  An environment of collaboration is beneficial when it comes to change.

To conclude, I think that all of the laws discussed in the book are important and very relevant both on an individual basis or a group basis.  I only mentioned a few of the 15 laws of growth.   These are present in the transformation process, starting with awareness, reflection, intentionality, and worth (law of the mirror) at the very beginning.  Growth comes from the tension caused by a change in an environment that supports collaboration and the continued curiosity for continuous improvement.  Finally, when team members can teach each other, their knowledge is elevated and helps create a culture of collaboration, growth, and development. 

The ABC Strategies for Procurement Transformation

Change is certain in every aspect of life. A major change or transformation may present some complexities particularly when resources are scarce. In my 27-year government career, I had a chance to test a few strategies. There are some strategies that worked for me whenever I went to a new agency to lead a procurement transformation.  These became my “go to” strategies to initiate the process and show progress in critical areas.  The success of their implementation helped me gain the support for resources needed down the road and accelerate the momentum in the transformation process.  

Interestingly most if not all of the transformations that I led shared a similar vision:  to become a trusted partner in the entity.  That vision was certainly a very lofty one given the starting point of each transformation initiative.  In most cases procurement was considered a roadblock to the operation and/or had the worst customer service record.  My task was to substantially improve the role and performance of the procurement team within the entity.  Common objectives included enhancing the quality of the interaction with end users, which generally related to concerns about speed, quality, customer service, and the ever-changing process.   The success would be measured in each case by significantly reducing end user procurement-related complaints that were brought up to high level executives.  

At the other end of the spectrum, procurement personnel attributed the process delays to understaffing.  There were reasons to believe that.  Almost every organization had experienced the loss of personnel due to massive layoffs, retirements, high personnel turnover, or the lingering effects of budget cuts several years before.  It’s not easy to recover from the loss of positions.  This is particularly true when the organization attempts to continue operating in the same way as it did before the budgetary reductions.   Reductions in personnel will inevitably exaggerate the much talked about length of the procurement process. 

To make significant progress quickly, I tried to focus on the root cause(s).  Over time, I developed my ABC strategies.  These helped me follow a path that would positively impact the most pressing issues and score some wins in the transformation process.  When higher executives task a new hire with transforming a department, they don’t generally trust that it is possible with the current staff. No transformation happens overnight; therefore, dealing with root causes of the most pressing issues is essential.   The goal of the ABC change strategies was to do just that. 

A first step in the assessment of the situation was to determine where was the brain power being allocated.  Data, when available, is very helpful to support findings and measure the extent of inefficiencies.  But I found that some of these issues were obvious to an outsider because as someone said: “it’s hard to see the picture when you are in the frame”.  It didn’t surprise me when data showed that 80%  or more of the effort was being directed to activities that did not add value to the process.  This meant that only 20% or less of the effort was being directed to advance the more complex solicitations. In other words, personnel were busy taking care of repetitive, low value add work, while the large and/or complex projects waited for procurement expertise and attention.  Even when the group appeared busy all the time or productive, the apparent productivity was not producing the desired return for the entity.  

To complicate the matter, some of these organizations reacted to the symptoms of the problem by replicating procurement infrastructures at the end user level.   In my opinion, the strategy created additional budget demands overall and greater inefficiencies because personnel in these end user procurement groups were rarely offered formal procurement training.  It also exacerbated the problem because it disproportionately increased the number of people demanding time and attention from an already understaffed central procurement team.  

The A is for Automation. One of the first strategies that I looked at was to automate repetitive tasks and shift the brain power to procurements.  I considered short term and long term strategies in the area of technology.  The success of a short term strategy would help accelerate momentum in the transformation process and gain support for long term strategy later on.  Good will accumulated early in the process comes in handy when you are seeking funding support for long term comprehensive technology.  The objective was first to maximize any existing technology to reduce manual work and repetitive tasks.  In each instance, I was able to garner support for a lower dollar plug-and-play strategy to make significant impact particularly in the areas of speed and/or quality.  The short term strategy varied from agency to agency as it depended on what was already available.  There is a short window to obtain resources in a transformation process and time is of the essence for requesting needed resources.  Any investment is looked at more favorably when it is presented as an opportunity “enhance the buying experience of the end user”.

The B is for Believe in the capabilities of the team.  When an organization is set up to execute tasks, it will take some time before personnel feel empowered to think critically. It is a major shift.  Routine is disrupted and people have to unlearn and relearn their jobs. During this transition, it’s not uncommon for people to feel alone.  There is no  comfort in knowing that others are going through the same process.    Self-doubt and the feeling of inadequacy kicks in. The leader must believe in the people and encourage them through the growth period.    Offering training, personal development, coaching, and mentoring are essential.  The leader cannot be indifferent to the struggle of each person in the team.  Some are going to struggle more than others of course.  But once the first person breaks through some of the barriers that kept him or her performing at the task executor level, others will also be encouraged.  The key is to help people believe in themselves by believing in them.  In the end, critical thinking will help in the quality of the interaction with end users. Trust will start to develop one project at a time.  The increase in trust will give room for a more collaborative relationship with the end user and this collaboration will enable better customer service. This collaborative approach along with the training will also help improve the quality of solicitations, which will enable higher quality responses from suppliers.  There is a high return on training and empowering the right personnel.

The C is for Consistency.  This third strategy may seem simple and it should be.  A strategy for consistency is necessary up front, at least in all the transformations that I lead.  Part of the reason why there was distrust in the process was because end users received a different answer depending on who they asked.  The root cause of the inconsistency varied, but in all cases the variety in approaches had been considered acceptable and became the practice.  This was a consequence of people working like “islands” instead of a team.  Achieving consistency required a sequence of internal communication,  the progressive standardization of processes, and implementation of best practices learned through professional training.  The adoption of best practices was an opportunity to get everyone one the same page and working as a team.  As end users started receiving consistent guidance, their trust in the process increased.  Gaining that trust was important because it also helped gain support for other changes later in the transformation process.

To conclude, there are three issues that I focused on early in the transformation process: speed, quality, and consistency.  Using my ABC approach helped me focus in areas that made significant impact early in the transformation process and enable the support of other strategies by accelerating momentum in the process. Reaching that point of momentum is important because buy in becomes easier and people tend to be more forgiving when a strategy doesn’t go as planned.