Finding your Procurement team’s North Star

The North Star Metric (NSM) 💫

The whole is greater than the sum of its parts.

How to locate your Procurement team’s North Star Metric(s)

To find your North Star metric:

  1. Ask, what is essential to the business’ functioning? Prioritize a list.
  2. Ask, what is essential that the Procurement function does for the broader business? Prioritize a list.
  3. Ask, what KPIs and metrics measure the top few, key factors?
  4. Ask, what metric encapsulates all of the above?
  5. Build a metric hierarchy, with the North Star metric on top of the pyramid (Mixpanel)

Potential Procurement North Star(s)

  1. Manage Costs and deliver Savings
  2. Ensure Product Quality and Sustainability
  3. Manage and Improve Supply Chain performance and Delivery

Manage Costs and deliver Savings

  • PO & Invoice Accuracy
  • Savings per Negotiation
  • Cost per Invoice & PO
  • Spend Under Management

Ensure Product Quality and Sustainability

  • Number of Claims
  • Number of Complaints
  • PPM Ratio
  • Emissions/Footprint per Component
  • Supply Chain Compliance Ratio

Manage and Improve Supply Chain performance and Delivery

  • Price Competitiveness
  • Lead Time and/or OTIF
  • Vendor Innovation Capacity
  • Vendor Engagement Rate
  • Vendor Availability

Reaching the North Star: People and Technology

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