Quality improving KPIs
Here you will find essential KPIs that help you to improve your procurement processes. Using some of the KPIs, may help you establish strategies to improve the delivery as well as continuity of your supply.
Issues due to poor quality supply
Low-quality products and services may affect product quality and add additional organizational costs.
Do we procure materials and services that fulfill or exceed the requirement of our clients? This KPI quantifies the purchase quality of the procurement branch.
Metrics to follow:
- Percentage of rejections. Goal: lower the percentage.
- Rejection of services from service providers. Lower the disapproval rate.
- Seller defect percentage. (Lower the defect rate, especially important if it directly affects customers).
- Identification of metrics such as defects per million (DPM). Measure the progress being made towards quality improvement.
- Direct supply quality standards. Goal: follow the supply quality standards.
Are stakeholders satisfied with the quality of their suppliers
Stakeholders, both internal as well as external, are regularly asked to rate their degree of satisfaction with Procurement’s performance and offer recommendations if they so desire.
You should also obtain feedback from suppliers since that might be directed towards quality as well as savings.
The most vital area is obtaining more knowledge of what is critical to the paying customer. This knowledge can be used in many procurement-related activities.
Question to ask: Did we procure materials and services that fulfill or exceed the requirements of our clients?
Metrics to follow:
- Percentage of key stakeholders satisfied with suppliers . Measure if satisfied or not (explain why) on numerical scale or satisfaction levels. Benchmark the results.
- Follow the recommendations of stakeholders. Goal: execute if possible.
This KPI measures the procurement department’s ability to satisfy its internal customers.