27 Procurement KPI Examples Divided In 6 Categories!

Procurement KPI’s can be divided into various categories e.g. general procurement measurements, delivery performance, cost measurements etc. Below follows a detailed list of 6 categories of procurement KPI’s accompanied with their respective performance measurements.*

What is important to remember is that these KPI’s are not taken in isolation, but are usually used to benchmark against best practices. At the end of this article, you will find a link that will show procurement benchmarking figures.

I. General Procurement KPI Measurements

  1. Purchase Dollars as a percent of sales dollars
  2. Purchasing Employees as a percent of company employees
  3. Sales Dollars per purchasing employee
  4. Purchase dollars spent per active supplier
  5. Purchase order cycle time (in days)
  6. Percent of purchase transactions processed thru e-commerce
  7. Percent of services purchases handled by the purchasing department
  8. Number of suppliers

II. Cost KPI’s

  1. Cost of Purchasing Order
  2. Cost avoidance = Actual Purchasing Price – Lowest Price Quoted
  3. Cost Reduction = Actual Purchasing Price – Last Price Paid
  4. Procurement ROI = (Cost Reduction + Cost Avoidance)/Cost of Procurement Operation

III. Quality KPI’s

  1. Supplier Quality Rating = (Lots Accepted/Lots Inspected) x (Samples Accepted/Samples Inspected) x 100
  2. Rework and Scrap Value in Dollars
  3. Return to Vendor Cost
  4. Ratio of Rejection = $ Value of Goods Rejected/$ Value of Goods Received
  5. Percentage of Suppliers Certified

IV. Delivery KPI’s

Lead Time Index

Supplier Expediting Summary

Availability = No. of times goods were available from supplier/No. of orders placed with the supplier

V. Inventory KPI’s

Inventory Turnover Ratio = Forecasted Cost of Goods Sold Over the Next 12 Months/Current Inventory Value (Inventory  average is 3)

Inventory Carrying Cost

Inventory Activity = Average Monthly Inventory Relieved/Total on Hand Inventory

VI. Employee Learning & Growth KPI’s

  1. Number of Procurement staff with Certifications
  2. Formal Classroom training
  3. Training Investment per employee vs percentage of dollar spend
  4. Employee Participation in Professional Bodies

When implementing procurement KPI’s, it is useful to actually know where you stand as compared to the overall industry average, or your own particular industry. The best way to use these KPI’s is by procurement benchmarking.

 

References

* Best Procurement Practices Course Manual – Robi Bendorf

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