Procurement KPIs You Can’t Afford To Ignore in 2022 and Beyond

Procurement comprises a critical element of every successful business organization and is responsible for managing and controlling the costs of purchasing supplies, raw materials, and services. The procurement process is no longer the simple source-to-settle cycle. In this digitized and technological era, it has grown into a full-fledged business function that plays a vital role in its overall growth strategy. As a result, procurement managers are looking at ways to make the procurement function more sustainable and streamlined.

How easy is it for you to answer these questions as a procurement professional?

• Are your new systems working?
• Are procurement costs under control?
• Are your suppliers satisfied with you and vice-versa?
• Is data entry related to PO, purchases, and other communication resulting in errors that disrupt vendor relationships?

Procurement metrics can help you to respond to these questions and more. Procurement KPIs are measurable values that track the procurement manager, officer, and team’s core efficiencies. Procurement KPIs are essential to evaluate and measure the performance of the procurement process.

“If you cannot measure it, you cannot improve it” — Lord Kelvin.

To build an effective procurement strategy, here are some critical Procurement metrics and KPIs which every Procurement Professional should measure and monitor.

Procurement Team KPIs

• Improve contract compliance
• Improve purchase order cycle time
• Reduce the rate of emergency purchases
• Improve total spend per vendor

Procurement Officer KPIs

• Lower supplier defect rate
• Improve PO accuracy rate
• Reduce supplier risks
• Improve cost avoidance

Procurement Manager KPIs

• Manage procurement inventories
• Keep procurement spend under management
• Increase procurement ROI
• Improve visibility of procurement process

Amongst many, procurement managers need to decide on the KPI to track based on the business type, size, and operations. The chosen procurement KPIs need to be relevant, realistic and enable efficient supplier, staff, and organizational performance management.

Next Steps

Is your business tracking the right procurement metrics and KPIs? Perhaps, No. The easiest solution is right here, right now. Download this Procurement KPI Worksheet to track procurement metrics and create a comprehensive procurement dashboard to enhance the vendor data analysis and improve procurement performance. The procurement KPI worksheet covers critical metrics like total spend per vendor, purchase price variance, supplier lead time & defect rate, days payable outstanding, and tail spend per vendor.

Download Now: https://aavenir.com/resource/procurement-kpi-worksheet/