Performance Benchmarking
A myriad of performance benchmarking options is available to managers in a bid to improve the performance function. The performance benchmarking approaches include internal benchmarking, functional benchmarking, and competitive benchmarking. The most useful benchmarking tool is vastly employed in competitive benchmarking. Competitive benchmarking is a practice that allows an entity to directly compare its operations, goods, and services to those offered by competitors. The tool allows a business to debunk the strengths and weaknesses of its competitors. The attainment of such information is instrumental in allowing a business to gain a competitive advantage amid stiff market competition.
Evaluating Purchasing Performance
Evaluating purchase performance is a delicate process that is often associated with numerous limitations and problems across the face of history. The discrepancies in the evaluation tool usually emerge from the fact that companies usually have vast information that has not been properly described. Also, the information is sometimes inappropriate due to both internal and external factors, which corrupt the accuracy of the appraisal tool. Furthermore, small and medium-sized corporations have many measurement and data problems because the goals are short-term rather than long-term. Furthermore, individual behavior tends to be driven by a myriad of measures. For instance, measuring performance as per the number of orders, performance will be affected. Typically, adopting more performance measures is instrumental in tracking and developing best practices for purchasing and procurement.
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Performance Measures that focus on the Cost versus Purchase Price
Measuring the cost against the purchasing price allows the entity to understand its profit margin. By understanding the profit potential of the establishment, it becomes easier for the production function to formulate and implement marketing and selling strategies. The bottom line is that there is no way an entity can improve organizational performance unless measures to collect informative feedback are devised. By using the feedback gathered, it becomes possible for managers to make feasible strategic decisions.
