In July 2017, the General Services Administration (GSA) published government-wide category management key performance indicators, which included monthly reporting of small business utilization using a federal database sponsored by GSA. in your organization, you should also complete the seven steps and track the four key metrics above to ensure compliance with best practices. Candidates that your team sources have already been vetted to some degree (youve reviewed their information on sites like LinkedIn, Github and Dribbble), and should be great potential matches for open roles. The vendor management KPIs youll want on your vendor management scorecard include: While choosing the right procurement KPIs is absolutely critical to achieving truly strategic sourcing, its also important to remember that KPIs draw their utility from transparency, timeliness, and accuracy. (No reporting was in place for fiscal years 2008 or 2009.) Baker Tilly US, LLP, trading as Baker Tilly, is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. Department of Housing and Urban Development, National Aeronautics and Space Administration, Strategic Sourcing: Selected Agencies Should Develop Performance Measures on Inclusion of Small Businesses and OMB Should Improve Monitoring. Differentiating Sourcing and Strategic Sourcing From Purchasing and We also have real-time insight into projected savings and related metrics, and our stakeholders have access to the information they needwhen they need itto make strategic sourcing and . Available: Customer-to-Cash Solutions Provider Research. Moreover, it acknowledges and accounts for the multiple complex factors that affect value. DOD, DHS, GSA, HUD, and OMB agreed with GAOs recommendation. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors. By gaining these insights, youre able to remove the bottlenecks slowing down your recruitment funnel. Drawing upon decades of experience, RAND provides research services, systematic analysis, and innovative thinking to a global clientele that includes government agencies, foundations, and private-sector firms. Moreover, OMB has not monitored agencies' compliance in reporting baseline data and performance measures on the inclusion of small businesses in government-wide and agency-wide strategic sourcing initiatives. ContentsWhat are sourcing metrics?Most important sourcing metrics to track Sourcing channel effectiveness Candidate pipeline speed Sourcing productivity Candidate conversion rate Response rate. If you dont have access to granular purchasing data already, a digital procurement platform can help by providing you with the information you need to make your business stronger. Data and performance measures that would provide a more precise understanding of the inclusion of small and disadvantaged businesses in strategic sourcing initiatives are limited. Out of these cookies, the cookies that are categorized as necessary are stored on your browser as they are as essential for the working of basic functionalities of the website. By aligning the organizations goals with the sourcing strategy, your organization can gain a competitive edge and optimize its performance and long-term savings. Strategic Sourcing: Improved and Expanded Use Could Save Billions in Assess performance relative to business value and strategy, Identify and prioritize improvement opportunities that offer the greatest potential return, Plan, manage and accelerate your journey to world-class performance, Functional and process costs and staffing levels, Percent of staff dedicated to decision-support activities, Percent of purchase order transactions requiring re-work. Some of the most important supply chain management KPIs to track include: Your supply chain isnt just a conveyor belt of materials, goods, and services. As a result, an organization might want to implement an incentive scheme for employees to refer candidates in their circle for a job opening. For information on reprint and reuse permissions, please visit www.rand.org/pubs/permissions. Its an excellent way to measure the effectiveness of your messaging, and in some ways, the attractiveness of your brand. If your team is finding high-quality candidates, then youll get positive feedback from recruiters that are handling the initial screening calls. Here are a three very simple rules to ensure you provide a good candidate experience when sourcing: None of these rules are rocket science, but they can help you make the candidate experience a key part of your sourcing strategy and process. Rogue spending eats away at the bottom line, ultimately increasing tail spend and the overall operating costs of your business. An easy-to-use, one-click procurement platform can decrease employee reluctance to use traditional (aka cumbersome) ways of buying. Solicit regular input and put procedures in place to ensure the plan is updated in real-time and can be quickly adapted to respond rapidly to changing real-world conditions. This involves identifying organizational requirements and determining metrics to measure success. In the current job market, complicated by the COVID-19 pandemic, recruiters and sourcers face the challenge of finding qualified candidates for many unfilled roles. OMB and GSA have developed guidance on strategic sourcing that stresses the importance of including small businesses. This is an important aspect of strategic procurement, especially given the current state of the world. But sound procurement practices by themselves arent enough. Strategic sourcing aims to procure goods, products, and services at the lowest total cost while keeping in mind product price, quality, value, logistics costs, overall savings, and product reliability. Attract & Engage Talent Maximize Data Quality & Integrations Retain & Grow Talent Talent Lifecycle Management Manage every stage of your talent lifecycle in a single platform, powered by AI. Through the dashboard, DOD has the capability to access information on small business utilization by category, such as baseline data, the number of small business actions, small business percentage, and small business unique vendor count. Our sourcing and procurement benchmarking services provide access to the unparalleled benchmarking information and resources that are part of The Hackett Groups proprietary Best Practice Intelligence Center a repository of processes, benchmark data and business best practices developed from more than 25,000 projects conducted at the worlds leading companies. optimizing MRO supply chain procurement here, How long is it taking for products to get to the business from the time an order is placed? In addition, NASA updated the Strategy Sourcing/Category Management portion of its Office of Procurement Analyst Handbook to require (1) the development of category management plans that are consistent with small business and other statutory socioeconomic responsibilities and (2) annual briefings to Office of Procurement leadership on category management metrics, including assessment of small business utilization against the fiscal year 2017 baseline and current year performance targets. Stay informed as we add new reports & testimonies. Why Large Enterprises Are Embracing Strategic Sourcing Full integration support for a wide range of applications. Visit Raiven to learn what we can do for you. As procurement itself moves into a more strategic role within organizations, optimized strategic sourcing also hews more closely to, and directly supports, overall operational goals for profitability, growth, business continuity, and more. It's part of supply chain management . With end-to-end visibility and a bevy of tools designed to bring procurement into the digital era (and support digital transformation while doing so), tracking KPIs and making process improvements is much easier. PDF Strategic Sourcing: First Source II Metrics - Homeland Security Also available in print form. Utilizing the latest technology and tools like artificial intelligence (A.I.) is an easy way to secure a competitive advantage for your business. Continually analyze their performance as well. We also use third-party cookies that help us analyze and understand how you use this website. Baldwin, Laura H., Frank Camm, and Nancy Young Moore, Strategic Sourcing: Measuring and Managing Performance. By tracking pipeline speed, youll get insight into how efficient and effective your team is at this part of the process. This is the only real window into your company that a candidate has at this stage, and the outcome is determined by the way your sourcing team treats them. Managing Indirect Spend Categories Analysis - Beroe Inc. Manage the full talent lifecycle to achieve your business goals and deliver a great talent experience. The RAND Corporation is a research organization that develops solutions to public policy challenges to help make communities throughout the world safer and more secure, healthier and more prosperous. Since we made this recommendation, strategic sourcing has become part of a larger effort, category management. Article Sources:https://www.michiganstateuniversityonline.com/resources/supply-chain/why-companies-should-consider-strategic-sourcing/https://blog.workday.com/en-us/2022/understanding-basics-what-strategic-sourcing.htmlhttps://hbr.org/2022/10/dont-abandon-your-just-in-time-supply-chain-revamp-ithttps://www.techtarget.com/searcherp/definition/strategic-sourcinghttps://aims.education/study-online/supply-chain-strategy/https://www.finextra.com/blogposting/22988/the-inevitability-of-risk-why-spend-management-is-key-for-business-in-unpredictable-timeshttps://www.insurancebusinessmag.com/us/risk-management/operational/working-towards-more-ethical-and-resilient-supply-chains-424723.aspx. To track the baseline and performance metrics, OMB and GSA developed a publicly-available federal database that provides information on performance levels on small business utilization by agency, spending category, and for the overall government. Sourcing Metrics: 5 Essential KPIs to Track - Beamery This simply measures the effectiveness of your outreach to prospects. This approach is in contrast to the common tactical sourcing approach, which is more reactive in nature and focuses on identifying quick and easy ways to immediately reduce spend. Supply chain alerts for price and product availability changes on the supplies that matter most to you. KPIs are especially important in the procurement department, as it touches every area of your business through spendand optimal processes can translate to greater value, cost savings, and competitive performance. For example, if you sent 100 emails to potential candidates and 12 responses, thats a response rate of 12%. This would also act as an indicator for workforce management of the sourcing and recruiting team. If you can build up a clear picture of where top talent is hanging out, then you can optimize where your team spends their time and resources. Sourcing as a concept might seem simple, but if youre not monitoring your teams performance and keeping an eye on crucial sourcing KPIs, then you could be in for a couple of nasty surprises down the line. You may find that candidates that apply via job boards have a much slower turnaround time in accepting an offer. You can read more about why this metric matters. case studies, client success stories, and testimonials. Where the best opportunities for savings are in indirect spend. However, if youre really looking to stand out and perform like your competitors, there are a few sourcing metrics you need to measure and optimize. PDF DHS Strategic Sourcing Metrics: FY15 - Homeland Security Visit, https://www.michiganstateuniversityonline.com/resources/supply-chain/why-companies-should-consider-strategic-sourcing/, https://blog.workday.com/en-us/2022/understanding-basics-what-strategic-sourcing.html, https://hbr.org/2022/10/dont-abandon-your-just-in-time-supply-chain-revamp-it, https://www.techtarget.com/searcherp/definition/strategic-sourcing, https://aims.education/study-online/supply-chain-strategy/, https://www.finextra.com/blogposting/22988/the-inevitability-of-risk-why-spend-management-is-key-for-business-in-unpredictable-times, https://www.insurancebusinessmag.com/us/risk-management/operational/working-towards-more-ethical-and-resilient-supply-chains-424723.aspx. It also involves engaging these qualified candidates, some of whom are actively looking for jobs and others are passive job seekers. eats away at the bottom line, ultimately increasing tail spend and the overall operating costs of your business. We use cookies to personalise content and ads, to provide social media features and to analyse our traffic. In addition, federal internal control standards state that information is needed to determine whether the agency is achieving its compliance requirements under various laws and regulations. NASA also updated its template for enterprise procurement strategy/strategic sourcing decision packages to include discussion of the strategy's impact on small businesses. For example, increasing the percentage of candidates that respond to your first message from 25% to 35% would encourage your team to write more personalized messages and result in a significant increase in candidates in your pipeline. It is a critical investment in your future that will pay dividends both immediately and in the long term. Procurement has long sought after these things, but historically struggled to reach the level of strategic business partner and obtain a seat at the leadership table. What are sourcing metrics? a. Further, OMB sets and reviews small business utilization goals for the 10 common categories of spending, such as facilities and construction and professional services. Finally, it notes that if any initiative is found to negatively impact small business performance, the agency group may convene to reconsider the strategy. When you follow a strategic sourcing approach, you are essentially looking at the big picture to identify ways you can add more long-term value to the organization at the same or lower cost. For more information on this topic, or learn how Baker Tilly public sector specialists can help, contact our team. Home Procurement Strategy Procurement Benchmarking. In response to this recommendation, Interior developed a policy memo in August 2017 that established an agency group to make strategic decisions regarding category management and review enterprise procurement initiatives, such as strategic sourcing. Strategic Sourcing: From Periphery to the Core - Harvard Business Review Unfortunately, theres a big leap between this initial idea and a sourcing operation thats humming with efficiency. Specifically, the guidance, published in April 2015, provided information on how to determine baseline data for small business participation in strategic sourcing initiatives and annual requirements for assessing small business performance relative to that baseline. Quite simply, it helps you improve your internal processes and makes them more effective, saving time and money. Your success is our success. Engagement. PDF DHS Strategic Sourcing Metrics: FY15 - Homeland Security In March 2019, OMB published additional guidance that required agencies to undertake specific management actions related to category management and to continue to meet small business goals. Learn About the 5 Most Common (and Costly!) Gartner supply chain benchmarking allows you to measure performance against peers, identify strategic priorities and future needs, and position the supply chain function to drive business goals. Manage every stage of your talent lifecycle in a single platform, powered by AI. A full-service Talent Lifecycle Management solution is a great place to start. A.I.-powered purchasing tools that find the lowest prices even when employees shop outside your preferred suppliers. When you work with a select, chosen set of suppliers at least in part with a proven ability to pivot, adapt and evolve, it makes it easier to avoid disruptions to your supply chain. Strategic Sourcing & Key Sourcing Metrics Debalina Roy General Manager - HR (Talent,Capability and D&I) Published Oct 15, 2021 + Follow Sourcing is a part of the Recruiting process.. The action you just performed triggered the security solution. Tasked with not only obtaining the best possible goods and services at the best possible return on investment (ROI), but also building and maintaining strong supplier relationships, purchasing departments need clear and complete visibility into all aspects of every purchase in order to operate at optimal efficiency and efficacy. Continuous process improvement in one area may have a ripple effect on others; for example, improved IT controls may result in more reliable data for decision-making in sourcing and procurement. Digital transformation presents new opportunities to reduce costs and staffing levels and deliver a Quantum Leap in performance improvement. Create a strategic procurement plan based on the business' needs. PDF Key Performance Indicators for Responsible Sourcing - BSR PDF Strategic Sourcing: OASIS Metrics - Homeland Security To help ensure that agencies are tracking the effect of strategic sourcing on small businesses, OMB's Administrator for Federal Procurement Policys should monitor agencies' compliance with the requirement to maintain baseline data and performance measures on small business participation in strategic sourcing initiatives. By taking these steps to review baseline data and performance measures on the inclusion of small businesses in category management initiatives, DOD can determine the impact of category management on small businesses. Doing business in a complex global economy means considering not only the quality of vendor performance and service, but the impact their practices will have on your own operations, business continuity, and reputation. can help by providing you with the information you need to make your business stronger. Sourcing and Procurement Strategy & Transformation - The Hackett Group And while data is key to adopting strategic sourcing in your organization, you should also complete the seven steps and track the four key metrics above to ensure compliance with best practices. For instance, if youve negotiated a discount on certain printer cartridges, but theyre not being used, you can direct your efforts elsewhere. That not only resets the entire recruitment process but also delays critical business operations. 5 New Metrics to Help Procurement Become More Strategic By taking these steps to create a performance measure on the inclusion of small businesses in strategic sourcing initiatives, GSA has helped ensure that OMB reporting requirements are met and that it can track the impact of its strategic sourcing efforts on small businesses. It doesnt matter how many people your team adds to your pipeline every week if the standard is poor. Since 2005, OMB has emphasized using strategic sourcing to improve efficiency in federal procurement. It is important to clearly communicate expectations and requirements as well as goals to determine if the suppliers are able to deliver on the long-term objectives of the organization. Online, theres little to no difference. The identified sustainability metrics offer actionable insights for categories with a large environmental impact. That can lead to greater long-term savings. If the answer to any of these questions is regularly a no, youll need to enforce terms and conditions and possibly look elsewhere in the future. Automation tools designed to eliminate common procurement problems that can compromise data integrity or delay access to crucial information, including: Real-time spend analysis tools, customizable dashboards, and advanced reporting and forecasting models to rapidly transform actionable insights into more strategic sourcing decisions. Track supply rates and on-time delivery statistics, especially when evaluating whether to re-up on contracts. Our business benchmarking services focus on three drivers of world-class procurement performance: Then, we use proprietary best practices benchmarking methodology to quantify your gap to world class comparing your sourcing and procurement functions ability to execute efficiently (cost and productivity) and effectively (quality and value). Undoubtedly, it is often seen as a cycle that includes supplier selection, spending analysis, and ongoing engagement. What you will find though, is that if you track these sourcing KPIs for a few months, youll start to get real insights into your process that you can apply to improve your results over time. It uses a descriptive survey methodology where questions related to the impact of the strategic sourcing process on the supply chain response in the face of the coronavirus pandemic were explored by practitioners.,In total, 130 valid responses were obtained.
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