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A key performance indicator (KPI) for procurement typically measures the efficiency and effectiveness of the procurement process within an organization. Main common procurement KPIs may include:
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Measures the amount of savings through effective procurement practices compared to the budget or historical spending.
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Tracks the performance of suppliers based on criteria such as delivery timeliness, quality of goods or services, and responsiveness.
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Measures the time taken from initiation to completion of the procurement process, indicating efficiency in acquiring goods or services.
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Tracks the accuracy of purchase orders issued, ensuring correct specifications, quantities, pricing, and terms.
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Measures the time it takes for suppliers to deliver goods or services after an order is placed, influencing inventory management and operational planning.
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Measures adherence to negotiated contract terms with suppliers, ensuring compliance with pricing, quality standards, and service levels.
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Evaluates how efficiently inventory is managed and utilized within the procurement process, impacting working capital and operational costs.
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Tracks the percentage of organizational spend that is actively managed and controlled by procurement, indicating procurement’s influence on overall expenditure.
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Measures the extent to which procurement engages with diverse suppliers, promoting inclusivity and resilience in the supply chain.
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Tracks procurement’s impact on environmental and social sustainability, such as through supplier sustainability practices or sourcing of eco-friendly products.
KPIs should align with the organization’s strategic goals and priorities, providing meaningful insights into the performance of procurement activities and supporting continuous improvement efforts. Each organization may prioritize different KPIs based on its specific needs and objectives.
