The use of KPIs to measure and monitor procurement activity is a well-established practice in both the public and private sector. Typically a ‗balanced scorecard‘ approach is used. This describes key performance areas and identifies a suite of KPIs which relate to each performance area.
Conventionally this system is used to monitor and measure issues such as financial performance, internal business process and supplier performance. It can though readily accommodate other forms of indicator including sustainability indicators. Alternatively environmental procurement indicators can be integrated with an organisation‘s environmental management system (EMS).
In general KPIs can be grouped into two categories i.e. process and outcome KPIs. Process indicators measure actions taken which are expected to result in improved outcomes, for example staff training. The measures described in the Sustainable Procurement Taskforce‘s flexible framework are effectively process KPIs though they are not described as such.
Process KPIs have the general advantages of being relatively easy to measure and achieve. They are particularly useful where an organisation wishes to measure compliance with a policy. For example an organisation may require all drivers to have been trained in efficient driving techniques as a means of reducing fuel use and the associated costs and emissions. This would be an easy measure to track. Simply measuring process however does not guarantee outcomes, In the case of driver training, drivers may simply not apply the techniques they have been taught. By way of contrast outcome KPIs have the advantage of measuring results, in relation to our
driver training scenario an outcome indicator such as average fleet fuel consumption would help to measure whether a driver training programme had been successful. As this example demonstrates it can often be helpful to use a mix of process and outcome measures. Process KPIs can help to demonstrate an organisation‘s intent to external organisations whilst also helping the organisation track the implementation of policies. Outcome measures are however the means by which progress in relation to results can be tracked and the only means of demonstrating success.