SynerDeal carries out a survey into Purchasing Performance Management

In May 2004, SynerDeal, a major player in the field of eSourcing in Europe, carried out a survey into Purchasing Performance Management among a sample of 100 Purchasing Managers in companies with sales of over € 500 million in all sectors of the economy:

1^st finding: Purchasing Performance Management is very closely monitored by companies:

• 72% of the companies which were surveyed consider that Purchasing Performance Management (PPM) is either important or very important,
   
• 85% of companies have set up PPM procedures, but only 67% of companies surveyed in the Banking and Insurance sector have done so, which shows that the rationalisation of Purchasing in this sector lags behind that of other sectors of the economy.
  
• 62% of General Managers monitor PPM indicators, which demonstrates the importance of Purchasing to the General Management of large corporations. However, only 27% of Financial Departments monitor these indicators, in spite of the considerable economic impact of Purchasing on a company’s margins.

2^nd finding: Purchasing Performance Management encompasses the use of many different indicators:

• economic criteria: a measure of overall savings and of changes in unit prices,
  
• organisational criteria: volumes negotiated by the Purchasing Department, relative performance of the purchases made by each entity,
  
• criteria linked to Purchasing strategy: the number of accredited suppliers and the geographical spread of these suppliers,
  
• and finally, managerial criteria: savings achieved by the buyers.

3^rd finding: the importance attached to the PPM indicators varies from one economic sector to the next:

• Although all sectors monitor the overall savings achieved on Procurement across the company, changes in unit prices are monitored particularly closely in the Food Industry and Retail sector,
  
• The scope of the volumes negotiated by the Purchasing Department is of particular importance to companies in the Retail sector (which feeds the debate between Procurement being handled at retailers’ central Purchasing Departments or at affiliates / individual stores),
  
• Technology companies, which are often multinational and very decentralised, are particularly keen on monitoring savings achieved by individual entities,
  
• Savings achieved by buyers are monitored particularly closely by companies in the Light Industry sector,
  
• The geographical spread of suppliers is also a key factor for companies in the Food Industry and Light Industry sectors.

4^th finding: Purchasing Performance Management is not always backed by efficient information systems:

• Only 53% of companies derive PPM indicators from an information system
  The figure is 70% in the Light Industry and Chemicals / Pharmaceutical sectors. It is less than 29% in the Food Industry.
  These rates confirm that it would be beneficial to introduce more information systems to Purchasing in order to be able to monitor this function.
  
  We should point out furthermore that this survey was only carried out among corporations with sales of € 500 million and above and that the rate of use of information systems for PPM purposes is doubtless far lower in smaller enterprises.
  
  
• The sources of information used are still very diverse
  When companies were asked what was the source of information which they used to monitor their PPM indicators, the answers obtained were particularly varied:

- 61% of companies source their indicators by extracting data from an ERP,

- 50% do so using bespoke systems or systems developed internally,

- 24% use an eProcurement application,

- 9% use an eSourcing application.

In the case of companies which use bespoke systems, these systems vary tremendously: some companies just use Excel spreadsheets whereas others use comprehensive information systems developed internally.

In spite of their relatively recent emergence, eProcurement tools are now beginning to be widely used for monitoring PPM indicators. Among the applications on the market, only eSourcing solutions can assess Purchasing activities at the level of negotiated terms.