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27ProcurementKPIExamples
DividedIn6Categories!

Findoutthe
factorsthataffect
yourstrategic
costmanagement
initiativesandthe
2directionsfor
strategiccost
management
implementation.
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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

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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

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