Examples of Non-Financial Performance Metrics
The non-financial indicators are particular to the company and ought to be created with the particular industry and business objectives in mind to grow more. To help the particular organization get started, here are some categories and examples given:
1. Corporate or Social Responsibility (CSR)
Businesses that practice corporate social responsibility make a deliberate effort to conduct their operations in a way that improves society and the environment as per requirement rather than degrades it. In addition to enhancing societal aspects and overall growth, corporate social responsibility (CSR) can assist businesses in projecting a positive image.
2. Environmental or Social governance (ESG)
The Environmental, Social, and Governance (ESG) framework is utilized to evaluate how well an organization performs on a range of ethical and sustainable business challenges to grow more. It also offers a means of quantifying commercial opportunities and risks as per requirements in those domains.
3. Reduced supplier risk management system
The overall process of locating, evaluating, and mitigating risks that could have an impact on an organization’s suppliers is known as supplier risk management, or SRM at the industry level. These dangers may include operational blunders, data breaches, and other interruptions to the company depending on goals and achievements.
4. Cost Avoidance
Preserving current spending to avoid the extra price rises brought on by economic factors, inflation, or the growing cost of goods and services to supply good services is known as cost avoidance. Purchasing an extended equipment warranty to reduce the overall maintenance costs or out-of-pocket charges is an ideal example of cost avoidance for a business or industry level.
5. Purchasing from Fair Trade
To seek out certificates and labels that attest to fair trade practices as per requirement, such as those from the World Fair Trade Organization, Fairtrade International, or Fair Trade Certified as well. Verify whether the supplier or brand discloses its required sourcing policies, has an open supply chain, and offers details on the overall working conditions.
What are Non-financial Performance Metrics for Procurement?
Most organizations set savings as their main procurement objective, but after a team reaches a particular maturity level of the process, it’s critical to include critical metrics for monitoring non-financial objectives. Procurement must be in line with the company’s strategy and goal, and it most certainly has the potential to directly influence some strategic objectives of its growth. At that point, procurement teams must start optimizing beyond cost reductions and quantifying contributions as per requirement in ways other than monetary ones. Today’s teams have shifted their focus to include assessing non-financial performance as a component of their overall strategy to grow the business process.
Contact Us