Is Procurement Speaking Managements Language?
One of the challenges of aligning Procurement with corporate strategy is understanding the jargon used by senior management. So we’ve defined for you three of the most important terms used by senior management. Earnings Per Share (EPS) – Achieving an EPS target is perhaps the most visible goal of the management of a publicly-held company. Financial market analysts publicize EPS expectations and company shareholders evaluate senior management based on the variation of actual EPS vs. expectations. EPS is calculated by dividing the company’s profits by the number of shares of stock issued to investors. Procurement can positively contribute to EPS by achieving savings that clearly contribute to profits. Leading procurement departments report savings in EPS. For example, if Procurement saved $2 million and the company had 100 million outstanding shares, Procurement could say that it contributed $0.02 to the company’s EPS. EBITDA – Executives often pronounce this acronym like a word. EBITDA
