For a procurement team that wants to show its value, tracking procurement key performance indicators (KPIs) is the best way to have quantifiable data at its fingertips. With the right tool, teams can monitor the most essential procurement numbers, compare goals to actual, and consider year-over-year progress.
Our free download gives procurement managers an at-a-glance view of top-level procurement metrics. It’s easy to use and customizable for tracking the metrics that matter most to individual organizations.
How to use this worksheet:
- Download the Procurement KPI Tracker using this link.
- Save the Excel workbook to your local drive and enter current procurement data as outlined in the instructions tab.
- View the last four (protected) tabs for cumulative data on past year actuals, current year actuals, current year goals, and comparisons.
What are KPIs for procurement?
Procurement KPIs are metrics used to measure the performance and efficiency of purchasing activities and processes. Teams use these KPIs to monitor progress against goals, set targets for improvement, assess performance compared to similar organizations, maintain high-quality processes, and determine the overall health of the supply chain.
These 16 procurement KPIs are popular options for tracking progress:
- Total procurement cost
- Monthly cost savings
- Total inventory cost
- Procurement ROI
- Average cycle time
- Delivery lead time
- Average supplier count
- Total items purchased
- Item defect rate
- Item quality rating
- PO processing costs
- Cost avoidance
- Cost reduction
- Expense ratio
- Year-over-year spend change
- Total vendor relationships
These metrics are all included in this procurement KPI dashboard.
How do I track procurement KPIs?
KPI tracking is as simple or complex as your needs require. A spreadsheet-based tracker provides the structure and information necessary for smaller organizations to demonstrate value and progress in their procurement strategies.
Follow these steps to get the most out of this procurement KPI dashboard Excel template:
- Gather all current and historical data on the procurement function. This may be found in various financial, purchasing, accounting, and stakeholder data sets.
- Establish goals for the procurement function that align with larger business objectives. For instance, if your organization wants to reduce costs, consider tracking KPIs like monthly cost savings or cost avoidance.
- Input KPIs into a tracking system accessible to the relevant procurement team members. This tracking spreadsheet gives you the framework needed to get started. Feel free to customize it to suit individual business needs.
- Set targets for each KPI. To measure progress, ensure your team sets realistic, achievable goals within a given period.
- Collect procurement data from supplier reports, internal reports, and vendor performance reviews. Sift through the data to identify anomalies or areas for improvement.
- Analyze collected data to understand procurement trends and insights. Look for opportunities to reduce costs or improve the efficiency of purchasing activities and processes.
- Create a dashboard with visualized data that allows stakeholders to easily monitor the progress of procurement KPIs compared to goals and provide an overall assessment of procurement health.
Procurement KPI Tracker Template
Download our free Procurement KPI Tracker Template today to monitor essential procurement numbers and demonstrate value in your procurement strategy.
What are the benefits of tracking procurement KPIs?
Tracking progress toward organizational goals should be foundational for any department. But for the procurement team, it can lead to better outcomes and revenue retention that impacts the entire organization. Procurement teams regularly tracking their most important KPIs often see numerous benefits.
Better visibility: Centralizing data is the first step to successful KPI tracking. The added benefit of centralization is increasing visibility into the entire procurement process. Dashboards and reports allow stakeholders to track the progress of KPIs quickly and gain a real-time view of fluctuations.
Stronger efficiency: When procurement knows what works and what doesn’t, it can focus more efforts and budget toward the activities that matter. This reveals where to trim processes or spending, improving operational efficiency and optimization.
Cost savings opportunities: Visibility into procurement allows teams to reduce costs associated with sourcing goods and services. For example, teams can use spending data to understand supplier performance better and make more affordable sourcing decisions.
Procurement numbers and trends highlight improvements that can lead to procurement savings. For instance, if the team finds delays or disruptions cause additional expenses, they can improve their processes or shift towards more reliable suppliers. Ultimately, accurately measuring and tracking the right KPIs helps organizations gain valuable insights into their procurement operations and uncover opportunities for cost savings.
Stronger negotiation: Procurement data visibility helps procurement teams build stronger data narratives that aid negotiation. With access to detailed data regarding the performance of individual vendors, it’s possible to identify reliable partners that objectively identify the best value for money. This information can be used to discuss new deals with suppliers, allowing procurement teams to negotiate better payment terms or discounts.
Better supplier relationships: Visibility and negotiation can strengthen relationships with an organization’s most important vendors. Transparency and data-driven negotiation builds trust between all parties. More transparent negotiations also create a more collaborative relationship where both parties work towards mutually beneficial outcomes.
Faster cycle times: Clean, up-to-date data and strong vendor relationships make the purchase cycle faster and more efficient. Strong data helps teams identify viable vendors quickly and begin discussions earlier in the purchasing cycle. Working with existing partners opens up opportunities and incentives that shorten the time required for purchasing.
Course correction: Regularly tracking KPIs for any purpose allows managers to monitor the success of their implemented strategies. It shows whether the assumptions about procurement experiments are correct and provides data for further refinement.
Demonstrated value: When the right strategies are in place, procurement becomes a value-creation center for the organization. Using quantifiable data to demonstrate the success of procurement efforts helps teams show their work. Positive data on procurement performance leads to better performance for the organization and better budget allocation for procurement to continue contributing to the company’s success.
Use Order.co to simplify tracking procurement KPIs
If your organization is growing in size and complexity, there may be better ways to track benchmark data about procurement than an Excel spreadsheet. Order.co allows teams to track the most important procurement data, including supplier quality, cost savings, procurement metrics for various categories, and more. Even better, Order.co provides various reporting features to create a performance tracking report with the most important data points.
To see the power of Order.co in helping maintain strong procurement performance, schedule a demo today.
Schedule a demo to see how Order.co can simplify buying for your business.
"*" indicates required fields