The very top individuals in European procurement, sourcing and supply chain management congregated in London on Wednesday night for a glamorous celebration of team and individual achievement.

The event began in the glorious May sunshine at Lords Cricket Ground, with guests in celebration style sipping champagne and cocktails. Before the dinner commenced, the evening's host Ian Lovett, Chairman of Dunbar Bank and Director of Zurich Financial Services   whipped the crowd to a humerous frenzy with a series of unforgettable (and a few forgettable) anecdotes. The crowd also welcomed David Rae, the new editor of Procurement Leaders magazine to reflect on the exciting plans for the magazine and network in 2008.

It was then the turn of the real stars of the show - the finalists and winners. The event resembled more of a Champions League Final (no link intended) as cheers rang out for North West Collaborative Procurement Hub, Southern Water, HSBC, Marks and Spencer, Mark Edwards from BP and finally Deutsche Post who all scooped the winning prizes in each of their respective categories. Highly commended and finalist organizations were also given a fantastic reception for their achievements.

The night drew to a close in style with more exotic drinks, live music and some cocktail flaring that even Tom Cruise in Cocktail would have been proud of. Those wanting the night to never end, moved on to the after show party at cuban nightspot Floridita in Soho and celebrated into the early hours. This is where this story ends… and another begins.

All in all, a fantastic evening and congratulations to the winners and all who took part. We can’t wait for 2009!

For all of the details, visit the website here.

I would like to doff my increasingly tired-looking hat to Jason Busch at Spend Matters . His blog, billed as ‘The Business Blog for Spend Management’, has once again unearthed some valuable data relating to the most ‘trafficked’ US and European sites in the procurement and supply chain sector.

And ‘Who Has Got the Eyeballs? Spend Management Traffic’ makes for interesting reading.

According to Spend Matters’ research sourced through, which ranked companies according to their three-month overall web traffic, the European Leaders In Procurement Network (http://www.europeanleaders.net/) continues to lead the way on this side of the Atlantic .

US based Purchasing.com and Spend Matters top the list, but ELP’s seventh position – our ranking of 1,318,947 puts us comfortably ahead of other online procurement and supply management resources - seems to suggest that when it comes to European procurement and supply chain management, it’s ELP that CPO’s are increasingly looking to when it comes to seeking out the news and views that truly matter.

The popping of Champagne corks could be heard all over South East London on Wednesday night as the winners from the inaugural European Leaders in Procurement Awards celebrated long into the night. And who can blame them.

A few years ago such an event would not have even been conceived as a possibility, and now, at one of London’s most notable venues, excellence in procurement was finally getting the recognition it not necessarily craves, but certainly deserves.

Over 200 people attended and walking around ear-wigging, as I tend to do on occasions such as this, there was an underlying air of goodwill and excitement. Even the Liverpool fans – who doubtless had their minds on events many miles away – seemed determined to enjoy themselves (although they would have needed to stay away from a radio, a television, or a Chelsea fan to really appreciate the evening).

Such was the continental flavour of the event that a German magician was touring the tables wowing onlookers with routine of beguiling tricks – and I should know, one minute I was propping up the bar and the next I was tapping a metal bowl and producing foam balls that were seemingly multiplying before my very eyes. Don’t ask me how I did it - I’ll tell you next year.

The awards, or the procurement Oscars as I coined them back in January, may have lacked the red carpet, and the over-the-top acceptance speeches, but the appreciation of the talent on show was as genuine in London Bridge as it would have been in Hollywood . And like their cinematic equivalents, the event attracted a truly international audience. Mingling in the bar before food was served I was fortunate enough to company representatives from across the world, and, with it being Vinopolis, the conversation, like the wine was flowing.

Grasping their awards the winners were understandably delighted. As I headed for the bar, Lucy Haighway, a winner in the Future Award Category, informed me she was off to buy some champagne, whilst others seemed to content to enjoy the sweet smell of success with just a Heineken Export for company. All of them made it clear that they are already looking forward to next year’s awards.

From a personal viewpoint the one disappointment of the evening was my inability to track down the winner of the evening’s lesser known, but equally important awards. Doug Brown picked up the ELP Wine Tasting Award, but after the ceremony was nowhere to be seen. Maybe the success had gone to his head.

KPMG's report on the value of outsourcing has thrown up some fascinating data. As ELP reported this week, although the majority of companies acknowledge the positive effect their outsourcing service provider has had on their business, very few are able to accurately identify the strategic benefits of their current contracts.

KPMG surveyed 659 companies across the world, with nearly half of all respondents having an annual turnover of over $1bn. Staggeringly, their research claimed 72% of the companies surveyed did not have a benchmark for measuring the success or otherwise of their outsourcing contracts. All of which renders the fact that 47% of respondents felt their outsourcing arrangements contributed positively to their business, as rather meaningless.

With 89% of those companies surveyed suggesting they will either maintain or increase their current sourcing contracts, it seems the need for companies to adopt coherent benchmarking measures of strategic success is more pressing than ever.

KPMG’s research also identified ‘significant’ opportunities for companies to harness the strategic value of outsourcing by assessing current procurement practices, but again it emphasised this was of limited use if the necessary benchmarking measurements were not in place – at present, the survey suggested, 42% of outsourcing arrangements are not currently supported by a formal strategic measurement framework.

Speaking at the launch of the figures in India, Pradeep Udhas, KPMG’s global partner-in-charge, sourcing advisory, commented: “Sourcing is as important as selling for organisations, as it not only impacts profitability, but also makes it much more nimble in todays dynamic environment.”

It seems then, if companies are really going to reap the benefits of their outsourcing contracts they owe it to themselves and their stakeholders to make sure they are properly benchmarked. Significant opportunities exist for organisations to capitalise on the strategic value of outsourcing, they just need to know where they are.

Whilst researching for a piece of work earlier in the month, I was amazed to discover some 3 million sites referencing procurement benchmarking. Undertaking even a cursory examination of the content of some of the more prominent sites and you conclude that the procurement function has got plenty to chose from, some of the approaches having more merit than others.

The original term ‘benchmark’ is derived from the chiselled horizontal marks that surveyors used for holding a piece of angle-iron which acted as a bracket, referred as ‘the bench’, for a levelling rod. This ensured that the levelling rod could be repositioned in exactly the same place in the future. Only one benchmark was typically required as a reference point. Unlike surveying, the application of benchmarking to commercial activities usually requires multiple reference points, which then need to be compared to a defined group of indicators. The danger with benchmarking in the commercial domain is to focus on too narrow a group of reference points. This can and does inevitably lead to a misleading view of the world around you.

With so much to chose from, and a striking lack of consistency across the numerous approaches that are on offer, it is probably worthwhile presenting some points to bear in mind if you are considering benchmarking your procurement function.

Firstly, when selecting your benchmarking protocol, it is important to choose an approach that covers a broad range of different indicators to include at a bare minimum metrics from the three following groups:

1. Organisational Metrics

Organisational metrics are the data that describe how the procurement activities within the organisation are performed e.g.

• The number of full time employees per €1bn spend
• The purchased spend as a percentage of operating costs
• The fully loaded cost per procurement employee
• The purchased spend per purchasing employee
• The total number of suppliers, by category and legal entity
• The number of suppliers per €1bn spend
• The number of training hours per FTE, by discipline and level
• The headcount supporting Sourcing, SRM, and Order Processing
• The number of non-procurement staff involved in Procurement
• The ratio of managers to staff

2. Purchasing Process Metrics

Process metrics are the data that relate to the process of purchase order capture through to payment e.g.

• Average cost to process purchase order through to delivery and payment
• 3^rd party spend per order
• Average cost to process invoices
• Volume of ‘straight through orders’ (i.e. no human intervention required)
• Level of compliant spend by Category, Supplier and Order Channel
• Average time to process an order
• Average time to pay a supplier

On this, there are only a few examples of surveys that provide any kind of serious insight around the processing of purchase orders. Purchase order processing and trade settlement in securities processing involve exactly the same activities; investment banks drove out significant levels of efficiency and improved levels of control by developing a set of simple and well understood metrics that helped them manage the process. There is no reason why the purchasing function cannot do the same.

3. Category Specific Metrics

Category specific metrics are the data that relate to the specifics of the contracts that have been established with suppliers e.g.

• Price per hour/unit/licence etc. for goods or services delivered by the supplier as compared to sector average, competitor price point etc.
• Payment terms
• Order query response times
• Service levels
• Penalty charges for late delivery
• Guarantee periods
• Late payment charges

It is important that the three areas outlined above are covered in depth because when combined they will give you the most balanced view of overall procurement effectiveness. Knowing that your procurement function is world class in terms of functional capability is of little value unless you know that the contracts that you have in place with your suppliers are actually saving your organisation money. Knowing that you have superior price points within your contracts is valueless, unless you know that people are using them. Effective benchmarking is about bringing together multiple sets of data, taken over different points in time, using different methodologies from a mixture of providers and interpreting this data in a balanced way and presenting a clear set of next steps. There is no ‘silver-bullet’ solution and it is the ‘next steps’ that are important.

All of the three areas outlined above can be rolled up into a ‘practises’ benchmarking study which looks at the way the various activities within the procurement function operate, such as Strategic Sourcing or Supplier Relationship Management. These studies capture selected metrics from the different areas and reference them back to world class standards. They also assess subjectively via interviews the activities within the procurement function to validate findings, and develop next steps. These studies are an excellent way to understand ‘what should be done’ as opposed to ‘what we are currently doing’.

Other valuable guidelines to bear in mind when considering benchmarking also include:

• understanding the definitions and constraints used for the applicable benchmarks
• ensuring that the population of reference data is relevant to your sector, large enough to be of value and covers a time period that is germane to the operational period in question
• deploying a study protocol that combines both objective and subjective data, ideally in such a way that they reinforce each other
• being clear about caveats that need to be attached to the metrics; price paid only tells one part of the story – is it the average price paid over time, or does it include the impact of supplier rebates?
• the inclusion of a broad range of reference points - internal, competitor, non-competitor, regional, best in class and world class
• make sure that you are comparing apples to apples - it is highly unlikely that your own data will match that of your study; understand the limitations, and the resulting implications.

Remember that benchmarking is not an exact science; in capturing data, approximations need to be made which may not necessarily work for your organisation. Engaging multiple providers and who employ different methodologies will allow a more balanced picture to emerge.

With at least 3 million possible perspectives on the topic, it is undoubtedly going to be difficult, (and fun) to know where to start; one thing is sure, there is plenty to choose from.