There cannot be KPIs for vendor development itself. Vendor development is not destination but it is a route to achieve larger goals of the purchase department.
Your development efforts should improve the quality of the material supplied, should maintain reasonable cost and should meet the delivery timelines.
Following are the KRAs of purchasing department:
• Total procurement expenditure as a percentage of sales revenue
• Procurement operating expenses as a percentage of total procurement spend
• Number of procurement staff as a percentage of the company’s total staff
• Sales revenue per procurement employee
• Total procurement spend per procurement employee
• Number of active suppliers per procurement employee
• Procurement spend per active supplier
• Cost of operating the procurement function per active supplier
• Percentage of active suppliers for 50%, 75% and 90% of procurement spend
• Percentage change in number of active suppliers in a reporting period
• Percentage of total spend with any “deemed” sensitive suppliers, e.g. local suppliers, small companies etc.
• Percentage of total company purchases handled by the procurement department
Comments on the KRAs: - Setting KRAs is one thing and its actual attainment is another. For this you need to train your procurement extensively. For this first you have to do audit of the purchase department. After doing audit, find out whether your procurement professionals are competent to handle the tasks of higher order. If not train them, coach them and then set the KRAs.
I am a leading procurement faculty of India. In the field of "Purchase and Inventory Management", I conduct several training programmes in this category. To know more about my training activities in this field, you may click the following links and download the respective documents:
Dinesh V Divekar - Procurement Faculty
Programme Structure for Various Training Programmes in Purchase and Inventory Management
In the above list, you will get one of the subjects as "Vendor Management" as well.
Management Training Consultant
Bangalore - 560092
Beware of false knowledge; it is more dangerous than ignorance.
29th December 2014 From India , Bangalore