Sourcing Strategies: Importance of KPIs

What are the most relevant KPIs for price reduction and delivery reliability in different sourcing strategies?

Price Reduction KPI:

In the volume concentration sourcing strategy, price reduction is the most relevant KPI. In the relationship restructuring sourcing strategy, delivery reliability is the most relevant KPI.

Explanation:

In the sourcing strategy of volume concentration, price reduction is the most relevant KPI (Key Performance Indicator). This strategy involves concentrating the volume of purchases with a single supplier to leverage economies of scale and negotiate better prices. By reducing the cost of purchases, the overall price reduction becomes a significant metric to measure the success of this sourcing strategy.

On the other hand, in the sourcing strategy of relationship restructuring, delivery reliability is the most relevant KPI. This strategy focuses on building long-term collaborative relationships with suppliers to improve reliability and responsiveness in terms of product delivery. Ensuring timely and dependable delivery is crucial in this strategy to maintain smooth operations and customer satisfaction.