Accuracy is a very important part of the business. To check procurement performance, a helping hand for measurement is indeed needed.  Keep on reading this article to know more about Measuring Procurement Performance: KPIs and Metrics for Success

Procurement metrics or KPIs stand for the Key Performance Indicators a measurable unit that is used to track purchasing goods and services. This is a major helping hand for the procurement department as it helps to control and regulate the cost, timing, quantity, quality, and source of the purchasing process.

Some KPIs and Metrics are mentioned below:

1.    Compliance rate:

It determines whether suppliers meet the requirement i.e., delivery time, discount, etc. The response of the supplier will be checked, which will decide whether to proceed further or not. Even an average company can reach various suppliers without a lot of investment.

2.    Number of Suppliers:

It tracks the number of suppliers linked with the company and tells the actual number of suppliers required. The accurate number of suppliers will help to work efficiently with the discounts. A supplier giving huge discounts can easily replace the other unwanted supplier.

3.    Order cycle time:

This includes the complete process of purchasing from start to end.  Begins with the ordering process, order approval, payment, receipt, and invoice. The payment sequence can change slightly as per the option provided.  The cycle time is an important factor. The reduced order cycle time can increase the productivity of the employee and save the overall cost. 

4.    Price Variance:

You can track the price variance of the same item and service. You can compare them and fix one as per your standard price. The price variance could be either negative as well as positive. Compare the services thoroughly to pay and save the capital of the company.

5.    Quality of the Supplier:

Evaluate the quality of items and services by supplier, you can check their reviews and ratings. It helps you from getting scammed. A team can work on the data and analytics of the supplier to keep up with the quality rather than compromising with the quality.

6.    Order Coverage:

The invoice should match the purchased order. The purchase order coverage should be done well enough for protecting the company from invoice fraud. Order coverage saves time, money and builds a strong bond with the supplier. It helps to avoid the three-way matching process of the procurement team.

7.    Supplier Availability:

It denotes the availability of suppliers along with the required amount of goods and services. Checking the availability of the supplier before fixing the deal. Monitoring whether the goods are in stock at the supplier’s workplace or if they can make the goods and services available in a short period. The availability with help to maintain the supply chain workflow.

Summing Up!!!

The procurement process can be tracked at every step with the help of the KPIs and Metrics. The data obtained will play a key role while working on the process.

Hope this article might be helpful and gave you a clear idea about Measuring Procurement Performance: KPIs and Metrics