Measuring procurement performance is an important role in an organization especially in supply chain during an economic downturn. Procurement not only encompasses role of acquiring goods and services which actually done by purchasing department, in fact, procurement responsibility is to explore and create strategies which align to business goals, mission, and objectives of an organization. First of all, we need to understand the differences between procurement and purchasing. Procurement involve the strategies, implementation of purchasing as well as interact with internal customers and external suppliers. Purchasing is more like a routine task of acquiring goods and services to help organization to maximize it output performance of incur minimum cost of purchase.
Fundamental of Procurement
For an organization to stay competitive in marketplace, purchasing role is crucial as a cost reduction in raw material can allow organization to competitively market the price of their finished goods in order to win the business or order. There is numeric performance measurement that organization can use when evaluating their procurement performance.