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27ProcurementKPIExamples
DividedIn6Categories!
Findoutthe
factorsthataffect
yourstrategic
costmanagement
initiativesandthe
2directionsfor
strategiccost
management
implementation.
ReadMore
WhatIs
Contract
Management?
Whatiscontract
management?
Discover7
criteriafor
contract
management3
Distinctareasfor
vendorrelations
inacontract
Howtomanage
thecontract.
GetYourManifestoNow
ProcurementKPIscanbedividedintovariouscategoriese.g.general
procurementmeasurements,deliveryperformance,costmeasurements
etc.Belowfollowsadetailedlistof6categoriesofprocurementKPIs
accompaniedwiththeirrespectiveperformancemeasurements.*
WhatisimportanttorememberisthattheseKPIsarenottakenin
isolation,butareusuallyusedtobenchmarkagainstbestpractices.Atthe
endofthisarticle,youwillfindalinkthatwillshowprocurement
benchmarkingfigures.
I.GeneralProcurementKPI
Measurements
FirstName
LastName
JobTitle
Company
1.PurchaseDollarsasapercentofsalesdollars
Email (wheretosend
2.PurchasingEmployeesasapercentofcompanyemployees
report)
3.SalesDollarsperpurchasingemployee
4.Purchasedollarsspentperactivesupplier
5.Purchaseordercycletime(indays)
6.Percentofpurchasetransactionsprocessedthruecommerce
7.Percentofservicespurchaseshandledbythepurchasing
department
Phone
City
Country
Pleasesendmeweeklyprocurement/sourcingtips
andspecialoffersontrainings
8.Numberofsuppliers
II.CostKPIs
Search
1.CostofPurchasingOrder
2.Costavoidance=ActualPurchasingPriceLowestPriceQuoted
4.ProcurementROI=(CostReduction+CostAvoidance)/Costof
ProcurementOperation
Strategic
Cost
Management
Implementation
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3.CostReduction=ActualPurchasingPriceLastPricePaid
Recent
Articles
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Purchasing&Procurement
VideoPresentations
III.QualityKPIs
1.SupplierQualityRating=(LotsAccepted/LotsInspected)x
(SamplesAccepted/SamplesInspected)x100
2.ReworkandScrapValueinDollars
3.ReturntoVendorCost
4.RatioofRejection=$ValueofGoodsRejected/$ValueofGoods
Received
5.PercentageofSuppliersCertified
TenderManagement
Process
IV.DeliveryKPIs
LeadTimeIndex
SupplierExpeditingSummary
Availability=No.oftimesgoodswereavailablefromsupplier/No.of
ordersplacedwiththesupplier
V.InventoryKPIs
ProcurementBestPractices
InventoryTurnoverRatio=ForecastedCostofGoodsSoldOvertheNext
12Months/CurrentInventoryValue(Inventoryaverageis3)
InventoryCarryingCost
InventoryActivity=AverageMonthlyInventoryRelieved/TotalonHand
Inventory
VI.EmployeeLearning&GrowthKPIs
1.NumberofProcurementstaffwithCertifications
2.FormalClassroomtraining
PurchasingManagersRoles
ReadMore
Purchasing
Management
TheProfit
Management
GroupIn
Your
Company.
Learnwhatare
thecomponents
ofpurchasing
managementand
howcanyou
managethose
components?
ReadMore
3.TrainingInvestmentperemployeevspercentageofdollarspend
4.EmployeeParticipationinProfessionalBodies
WhenimplementingprocurementKPIs,itisusefultoactuallyknow
whereyoustandascomparedtotheoverallindustryaverage,oryour
ownparticularindustry.ThebestwaytousetheseKPIsisby
procurementbenchmarking.
PurchasingSavings
References
*BestProcurementPracticesCourseManualRobiBendorf
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WinningSupplier
Negotiations:WhoReally
Wins&Why?
PurchasePriceIndex