PurchTips edition #352<\/p>\n<\/div>
The Balanced Scorecard is one of the most widely-used \u201cmanagement systems.\u201d A main principle of the Balanced Scorecard is that long-term success is achieved by focusing on the right combination of goals, not just one type of goal.<\/p>\n
To illustrate this, consider a company that focused solely on current-year profitability. The company might think that downsizing its customer support department would save money and, thus, be a smart way to boost profits. And it might boost profits in the short term. But it wouldn\u2019t be long before poor customer support would drive customers to competitors. And that would hurt the company\u2019s long-term profitability and sustainability. Thus, the need for balance.<\/p>\n
The Balanced Scorecard guides companies to focus on four \u201cPerspectives\u201d: Financial, Customer, Internal Business Process, and Learning and Growth. If your organization uses the Balanced Scorecard, you\u2019re likely to use it in procurement. Balanced Scorecards are meant to be \u201ccascaded.\u201d This means translating \u201cthe corporate-wide scorecard down to first business units, support units or departments and then teams or individuals\u201d (Balanced Scorecard Institute).<\/p>\n
But, even without a corporate \u201cmanagement system,\u201d you can adapt the Balanced Scorecard to procurement. You do so by developing good goals, measurements for those goals, targets for those measurements, tasks that support those targets, and personnel assignments for those tasks for Financial, Customer, Internal Business Process, and Learning & Growth Perspectives. For example, for the \u201cFinancial Perspective,\u201d your goal may be cost savings; your measurement may be amount of spend reduction on previously-purchased goods\/services; your department target may be $900,000; your tasks may be negotiation and sourcing; and your personnel may be your department\u2019s 9 procurement specialists.<\/p>\n
If you\u2019re SPSM-Certified or enrolled in the SPSM Certification Program, you can get a sample procurement Balanced Scorecard from the NLPA website. Login at https:\/\/app.certitrek.com\/nlpa\/login<\/a> and go to the Library tab.<\/p>\n<\/div><\/div><\/div><\/div><\/div> Members of the NLPA get great articles just like this by email every month. As a member, you will also get access to:<\/p>\nWant to get more procurement articles by email?<\/h3><\/div>
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