Develop Your Supply Chain Analytics Programme

Five steps towards a high-performing analytics programme which helps to improve Procurement’s performance and reputation


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This video introduces a well-proven Five Step approach to developing a Procurement focussed supply chain analytics programme. Supply chain analytics itself is nothing new but it is only relatively recently that Procurement has recognised the power of data analytics and how it can be used effectively to improve Procurement performance and especially, to improve stakeholder relationships.

This video should be viewed with the video “Supply Chain Analytics Programme ans Internal Relationships”.


There are many areas in Procurement where an effective and mature supply chain analytics program is desirable and even necessary. Spend analysis, supplier risks assessments or purchase price variances are all areas where Procurement should not only have transparency on the past, but also a good understanding what to do in future. This video will guide you through the steps required to develop a comprehensive analytics programme designed to improve Procurement performance and reputation. The design of an appropriate analytics programme involves five steps:

Step 1:

Agree the needs - what needs to be measured in your environment. Assess these needs against the maturity curve including the need for Descriptive,Interpretive, Predictive and Prescriptive KPIs. The former being of low maturity and the latter high maturity.

Step2:

Review Lagging (the past) versus Leading (the future) indicators for each area of measurement. You may find that for a specific area, your current descriptive KPIs are enough while in others a KPI which helps you predict an outcome is essential to changing behaviour and improving performance.

Step 3:

Find appropriate Leading indicators. The challenge is to determine KPIs which are relevant to your circumstances.

Step 4:

Test your desired Leading indicators. Only by testing will you determine that your leading indicators are appropriate. Will the chosen KPIs likely lead to improved performance.

Step5:

Anticipate and overcome challenges to your new analytics programme. A programme that includes both Lagging and Leading indicators may surface hitherto hidden performance issues, perhaps in another function, or although may not be directly related to Procurement will predict Procurement related performance. You may also need to get access to external data to measure against. Don’t underestimate the politics associated with measurements!

Your analytics programme needs to be comprehensive, balanced and focussed on improving performance both Procurement’s and that of your organisation at large. The challenge with leading indicators is that they are always more difficult to determine than lagging indicators. However only an appropriate combination of leading and lagging indicators will result in enhanced procurement performance and importantly reputation, by providing demonstrable value to stakeholders.

Faculty name: Eric Larson
Duration: 20:16 Min.
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