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How do you how do you actually measure the supplier adoption? That’s typically and and there are different ways to do that. Of course, the the starting point would be the spend. We recognize and we build all of our business case metrics around your direct spend. And direct spend, for those unaware, are those costs that are PO backed that contribute to your cost of goods sold, right? So from a P and L perspective, your direct spend has some element, some portion of your cost of goods sold. And so that direct spend, if we’re able to manage those purchase orders and improve supplier on time delivery for 80% of your spend, there are hard cost savings, soft cost savings, and revenue protection benefits that we can afford. And so we measure it based upon that spend. Now so that’s the first part is the the percentage of direct spend. We also measure the supplier, acknowledgment rates. Right? So, today, that scenario that I mentioned where an email goes out and then there’s phone and email communication to acknowledge the purchase order and then subsequent changes, which, by the way, across our existing customer base, a typical PO has a 52% change rate over its life cycle. So there’s quite a few changes to purchase orders. So each of these emails and phone numbers, excuse me, phone calls is exacerbated by the fact that these POs continue to change. So supplier acknowledgment rates is critically important. We measure that and that can be aggregate or at the supplier level. We also look at the responsiveness. Right? So how not only are they responding, but how how frequently, how long does it take for a supplier to respond to a new or a changed demand? And then, of course, supplier on time delivery performance. These are three critical metrics, acknowledgment rates, responsiveness, and on time delivery performance. Those are the three primary areas that translate to either hard cost savings, productivity gains, or revenue protection.

3 Supplier Performance Metrics That Drive Cost Savings

Learn three supplier performance metrics procurement teams should track: acknowledgment rates, responsiveness, and on-time delivery performance.

Jim FryeSr. Solutions Engineer | Epicor

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