The development of a performance measurement system for indirect procurement: a Delphi study

Abstract

Purpose

This study aims to address the current gap in knowledge of indirect procurement performance management. It attempts to argue the need for a specific and tailored performance management approach for the indirect procurement function that incorporates a balanced approach, beyond financial measures.

Design/methodology/approach

The case study approach evaluated key performance indicators from a balanced scorecard (BSC) perspective in the development of a performance measurement system (PMS) for a Middle Eastern university’s indirect procurement division. It initially reviewed the literature to assess potential indicators for this context. It used vision and mission statement analysis alongside expert interviews to augment the literature. The candidate indicators were then evaluated and ranked by an expert panel through applying a four-round Delphi technique.

Findings

Twenty-nine procurement-specific indicators are suggested in a BSC framework. The five highest-ranked indicators were not in the financial perspective unlike other BSC studies in the broader field of supply chain management (SCM).

Practical implications

The study suggests a framework and indicators for a procurement PMS for practitioners to consider. It also highlights there is no one-size-fits-all and that organisations need to tailor PM to the organisation and divisional strategy and operational needs. This study aids the development of guidelines for executives and procurement management that wish to develop indicators and a PMS.

Originality/value

This study contributes to knowledge by partly addressing the under-researched field of indirect procurement PM. The literature suggested that various roles in SCM require specific PM indicators. This study puts forward a BSC framework with 29 indicators specifically for indirect procurement. Fourteen of these indicators were derived from non-literature sources. This study enhances knowledge and contributes to the limited debate and evidence on indirect procurement PM and the broader PM literature.

Citation

Darom, M. and Plant, E. (2023), "The development of a performance measurement system for indirect procurement: a Delphi study", Measuring Business Excellence, Vol. 27 No. 4, pp. 579-601. https://doi.org/10.1108/MBE-05-2019-0047