Need for company cost reduction has increased considerably due to strong (global) competition. Several ways of cost reduction have already been carried out e.g. manpower and operating cost reductions. New ways are required to further improve company results and now Procurement has become a major contributor to cost reduction.

Procurement of goods, services, chemicals and raw materials for some companies represents more than 80 % of product cost or total cost. It means that savings made through better procurement can be extremely significant and have direct impact on company profit results.

Improvement of procurement effectiveness and efficiency has become critical. In addition, it is essential for proper management to regularly measure both performance of procurement activities and progress made to meet agreed procurement objectives.

Procurement Balanced Scorecard (PBSC)

As procurement has grown to become a highly strategic activity, development, implementation and execution of your procurement strategy and objectives should be carefully evaluated. Equally important is monitoring the effect of procurement process improvements including sourcing, contract and vendor management and invoice payment including the purchase to pay process.

Usually the effect of the implementation of an ERP system or procurement management solution is only monitored by the reporting provided by these solutions. The lagging indicators (financial only) provided by these systems do not allow executive management to properly monitor and effectively improve procurement activities.

The PBSC created by Ackinas provides quantitative and qualitative monitoring facilities. The PBSC includes a template model holding the core objectives and measures for all Procurement related activities. It covers monitoring of effectiveness of higher and medium value purchases, efficiency of low value purchases and implementation of policies, procedures and controls. Also, the evaluation and development of worldwide procurement best practices.