• Value Chain Optimization Productivity refers to the measurable gains in efficiency, cost savings, or output quality that result from improving the performance of activities across the entire value chain - from procurement and production to distribution and customer service. 
• Example: we optimize pack size of a certain SKU and reduce the per unit cost. An additional advantage of this initiative results in better transportation efficiency i.e truck can carry more cases vs before thereby reducing the freight cost per case. 

• Documenting the role of procurement vs other function can be challenging. 
• Functions may disagree and lay claim to productivity. 
• Double counting by different functions remain a risk. 

• How do we treat the additional transportation savings driven by this initiative?
• Does the transportation benefit count as procurement Productivity or not?

• It counts as procurement productivity, if procurement team led or directly influenced the SKU optimization, e.g. Working with suppliers to change packaging, negotiating new pack formats, coordinating cross-functional efforts (with supply chain, logistics, etc.)

Governance

• The benefit (e.g., transportation savings) is traceable and measurable, and it's captured within the scope of procurement's responsibilities (e.g., landed cost, total cost of ownership)
• It will not count as procurement productivity, if the initiative was owned entirely by another function, and procurement had little or no role in identifying, negotiating, or enabling the change. In this case, the productivity gain is still valid - just not attributed to procurement. 
• Create a mechanism to separate P&L accountability vs functional. 
• Align productivity recognition with the other functions upfront to avoid disagreement or any duplication.
• TCO approach should be adopted, and negative impact should be recorded as well.