Performance Measurement and Evaluation 765 Exhibit 19.3 Examples of Strategic Pu
ID: 392417 • Letter: P
Question
Performance Measurement and Evaluation 765 Exhibit 19.3 Examples of Strategic Purchasing Measurement Indicators .Percentage of purchasing's operating budget committed to on-site supplier visits Proportion of quality-certified suppliers to total suppliers .Percentage of receipts free of inspection and material defects Total number of suppliers overall and considered strategic Proportion of suppliers participating in early product design or other joint value-added activities .Revenue increase as a result of supplier-provided technology that differentiates end products to customers .Percentage of operating budget allocated to supplier development and training Total cost supplier selection and evaluation measures .Supplier environmental sustainability .Supplier lead-time indicators .Purchasing's contribution to return on assets, return on investment, and economic value-added corporate .Purchasing success with achieving cost reductions with Tier 2 and Tier 3 suppliers Percentage of purchase dollars committed to longer-term contracts . Savings achieved from the use of companywide agreements .Purchasing's contribution to product development cycle time reduction .Percentage/dollar value of items purchased from single sources .Percentage of purchase dollars committed to highest-performing suppliers Percentage of purchase transactions processed electronically .Percentage of total receipts on a just-in-time basis .Supplier quality levels, cost performance, and delivery performance compared with world-class performance targets Supplier development costs and benefits Continuous supplier performance improvement measures Reductions in working capital because of purchasing and supply chain efforts Contribution to return on investment and assets realized from strategic outsourcing efforts Savings achieved from part number reduction efforts Savings achieved from part standardization efforts . Risk identification and reductionExplanation / Answer
Answer:
Following are the five indicators selected for research.
Proportion of quality certified suppliers to total suppliers: This is the indicator which indicates the proportion of suppliers which are certified in quality standards. The suppliers certified in quality standards are like ISO certification, TS certification, TPM certification etc. This gives the quality level of suppliers. This is strategic measure because this will help in developing the right set of suppliers for the organization which are better placed in quality for contribution in the organization.
Percentage of receipt free of inspection and defect free: This is good measure because this helps in reduction of company resource and energy in inspection and managing the defects. A defect free and inspection free tag for the suppliers is very strategic as it will reduce the overall efforts of the company provide better quality products for the organization.
Continuous supplier performance improvement measures: This means the measures for the continuous improvements of the supplier performance so that suppliers remain on the improvement trend and achieves better performance standard in future. This is strategic because it will help in developing the suppliers for meeting future requirements of the organization.
Purchasing contribution to product development cycle time reduction: Contribution in reduction of product development cycle time is the key support for the company, as this shows commitment fo the supplier towards the success of the company. This is a good strategic measure as in future supplier help in development is significant and lot of support is needed from suppliers for development projects.
Purchasing success with cost saving achieved with tier 2 and tier 3 suppliers: Cost saving achieved with tier 2 and 3 suppliers helps the organization to achieve cost efficiency and reduce the material cost for the organization. This is a strategic initiative because cost saving improves the profit margin for the organization and helps in future survival.