Measuring Value Creation of Procurement – What KPIs Are UsedDepending on Maturity
Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
The purpose of this thesis is to study what KPIs are used at management level to measure value creation of procurement given its level of maturity. Previous research by e.g. Cousins et al. 2008), van Weele (2010) and Caniato et al. (2012) has identified value creation areas that are measured in procurement. However, a key factor called procurement maturity has been verlooked. The role of procurement in different organizations will vary depending on how mature the procurement organization is (e.g. Keough 1993, Paulraj et al. 2006, Reck and Long 988,), hence maturity is a deciding factor of how the procurement organization works and what alue it can contribute to (e.g. Keough 1993, Schiele 2007, Cousins et al. 2006, Paulraj et al. 006). Also, given the limited time and resources that companies and especially management ave they must focus their attention to where it can yield the most return. It then becomes mportant to study what value creation areas that companies prioritize and focus on. As maturity f the procurement organization has a profound effect on the value creation and given the limited ime and resources that management has, it becomes necessary to study what KPIs are used by management to measure the procurement organization depending on its maturity level.
The study was conducted by sending a survey to the 500 largest companies by revenue in Sweden. In order to triangulate the results and gain deeper understanding interviews were held with 10 people at 9 different organizations.
Our research findings suggest a sequential approach to which value areas that are measured. This s in contrast to e.g. van Weele (2010) and Cousins (2008) who does not specify any particular rder and Duffy (2008) and Carter et al. (2005) who merely list potential value creation areas and corresponding KPIs to measure. Furthermore, we identify three different categories of areas o measure; value creation areas, enablers and booster KPIs. This also contrasts previous esearch that tends to mix areas for value creation and enablers when discussing strategic rocurement. In addition we present our own model "The Procurement KPI Onion" that provide managers with support and inspiration of what value creation areas to measure depending on maturity as well as areas to measure to improve maturity of the procurement organization and ow they both evolve with increasing maturity.
Place, publisher, year, edition, pages
2013. , 93 p.
Procurement, Purchasing, Procurement Maturity, KPI, Value Creation, Measuring
Economics and Business
IdentifiersURN: urn:nbn:se:kth:diva-143025OAI: oai:DiVA.org:kth-143025DiVA: diva2:705168