Purchasing KPI: Key Figures: Efficient Procurement for Companies

Purchasing is the backbone of every company. It significantly influences both the cost structure and the quality and availability of products and services. In today's highly competitive business world, efficient procurement management makes the difference between success and failure.

Key Performance Indicators (KPIs) in purchasing act as a compass for companies in Germany. They enable a precise evaluation of procurement processes, uncovering weak points and identifying optimisation potential. By continuously monitoring these key figures, companies are able to refine their purchasing strategies and increase purchasing efficiency.

Definition of key figures in purchasing

Represent key performance indicators (KPIs) as measurable values that quantify the success of specific activities or processes. In a purchasing context, KPIs serve as performance indicators that measure the efficiency and effectiveness of Procurement processes . They provide concrete data to assess purchasing performance and support well-founded decisions to organize purchasing and therefore to optimize processes.

What are the most important KPIs in purchasing?

The variety of purchasing KPIs enables companies to set individual focal areas to set. Nevertheless, ten key figures for purchasing are emerging, which serve as the basis for effective procurement controlling across industries. The following key figures and KPIs in purchasing provide a solid basis for measuring and maximising purchasing activities.

1. Cost per order

The costs per order reveal the Efficiency of the ordering process. A company that processes 10,000 orders annually with a total cost of €500,000 has a cost of €50 per order. Process improvements, such as the introduction of an e-procurement system, can significantly reduce this figure.

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2. Cost reduction

The cost reduction shows the savings through strategic purchasing measures. If a company originally spent €1,000,000 on raw materials and reduced the price to €900,000 through renegotiations, the result is a cost reduction of 10 %.

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3. Process costs for C-parts

The process costs for C-parts show the cost structure when procuring low-value materials. According to BME, the process costs for orders up to €250,000 per year are between €100 and €160 per order. Various studies (Gerberich Consulting/ HTWK Leipzig) confirm that the process costs for a non-digital purchasing process vary between €95 and €160, depending on the company, industry and degree of digitisation. By digitising the purchasing process, savings of up to 40% can be achieved.

The process costs are caused by various expenses:

• Purchasing processing costs: These include the processing of orders, supplier management and invoice verification.
• Transaction costs: They arise from the entire procurement process, from ordering to payment, and include, for example, communication with suppliers and the administration of orders.
• Quality assurance and control costs: These costs are incurred to ensure that the products or services purchased meet the specified requirements.
• Costs due to inefficiencies: These include processes that cause unnecessarily high costs due to inefficiency, such as unclear contract structures or long approval processes.

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4. Supplier quality

The supplier quality reflects the Reliability of suppliers. With 1,000 deliveries a year, 980 of which were error-free, the supplier quality is 98 %. A high rate minimises rework and production downtime and, as a result, increases the performance and efficiency of many companies.

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5. Delivery reliability (OTIF — On-Time, In-Full)

The OTIF quota includes timeliness and completeness of deliveries. With 500 deliveries, 475 of which arrived on time and in full, the OTIF ratio is 95 %. A high rate ensures smooth production processes and promotes customer satisfaction.

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6. Savings through negotiations

This key figure quantifies the Negotiation skills of the purchasing team. If, as a result of renegotiations, the price of a component is reduced from €100 to €90, the result is a saving of 10%. Accumulated over all negotiations, there is potential for significant cost reductions, another important indicator of efficiency in e-sourcing.

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7. Number of suppliers 

Balancing the optimal number of suppliers, minimize risk and manage efficiency. A company with 1,000 suppliers could consolidate Reduce administrative costs to 800 suppliers and at the same time intensify the quality of relationships with core suppliers.

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8. Procurement cycle time

The procurement cycle time directly influences the responsiveness of a company. A reduction of an average of 30 to 25 days enables more flexible adjustments to market changes and optimises inventory.

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9. Purchase volume per supplier

Another important KPI is the purchasing volume per supplier. The key figure helps identify dependency on suppliers. If 30 % of the purchasing volume is accounted for by a single supplier, there is a need for action to diversify risk.

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10. Complaint rate

The complaint rate reflects the Satisfaction with suppliers. With 1,000 orders and 20 complaints, the rate is 2 %. A low rate reduces reprocessing costs and increases customer satisfaction.

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11. Return on investment (ROI) in purchasing

The ROI quantifies the value proposition of purchasing. With savings of €500,000 and investment costs of €200,000, the result is an ROI of 150 %. A high ROI justifies investments in purchasing resources and technologies.

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Bonus: sustainability KPIs

Sustainability KPIs are becoming increasingly important:

• Share of sustainable suppliers: (number of sustainable suppliers/ total number of suppliers) × 100
• CO₂ balance of procurement: Total CO₂ emissions of all purchased products and services
• Recycling rate: (quantity of recycled materials/total quantity of materials procured) × 100

How do you optimise the purchasing strategy through KPIs?

Knowledge of relevant KPIs forms the basis for an effective purchasing optimisation. The practical application of these indicators enables continuous improvement of Procurement processes. By systematically recording and analysing indicators, companies can identify bottlenecks, eliminate inefficiencies and improve their overall performance, which means that purchasing departments buy more efficiently.

Strategic planning in purchasing

Strategic purchasing planning comprises long-term alignment of procurement activities with corporate goals. Key performance indicators support these processes by defining measurable goals and making progress transparent. For example, by analysing the number of suppliers and the purchasing volume per supplier, a strategy for supplier consolidation can be developed.

As part of strategic planning, we defined specific strategies to reduce costs and improve the quality of purchased products. Strategic purchasing also focuses on improving the supply chain, selecting optimal suppliers, optimizing warehousing and the integration of innovative technologies to secure competitive advantages and improve a company's performance.

Key figures for optimising purchasing volumes 

KPIs such as Costs per order and purchasing volume per supplier enable targeted optimisation ofOptimizing procurement volumes. By identifying High-volume suppliers, economies of scale can be used and more favourable terms can be negotiated. At the same time, analyzing the procurement cycle time helps to optimize order quantities and frequencies.

The analysis of cost reductions shows the savings potential through strategic purchasing measures. Monitoring the number of suppliers also helps to achieve a balance between Minimize risks and to achieve efficiency. By using Economies of scale companies can significantly reduce their unit costs.

Long-term savings through effective purchasing control

Purchasing controlling is the term ssystematic planning, management and control of all procurement activities. By continuously monitoring KPIs such as cost reduction and ROI in purchasing, long-term savings potential can be identified and realised.

Effective control enables proactive Adjustments of the purchasing strategy to changing market conditions. According to a study, an automotive supplier was able to demonstrate savings of 2.3 million euros in the first half of 2023 by implementing a monthly purchasing control dashboard. Purchasing controlling also supports strategic decision-making by providing important data and key figures that are necessary for well-founded purchasing decisions.

Safety in purchasing and procurement - simple system

At simple system, we provide an integrated solution for recording and evaluating purchasing KPIs. Our platform enables real-time monitoring of all relevant key figures and thus supports data-based decisions in procurement management. Through automated processes and intelligent analysis tools, simple system optimizes Compliance with defined KPI goals and promotes continuous improvement of purchasing performance.

Our platform offers access to more than 850 suppliers and 80 million items, which eliminates manual effort in order processing, goods receipt and invoice verification. In addition, simple system enables easy connection to SAP systems and helps companies to sustainably optimize their purchasing processes.

synopsis

Purchasing KPIs form the basis for efficient procurement management and implement a holistic evaluation of purchasing performance. Die ten most important figures include costs per order, cost reduction, supplier quality, delivery reliability (OTIF), savings through negotiations, number of suppliers, procurement cycle time, purchasing volume per supplier, complaint rate and return on investment (ROI) in purchasing.

By integrating sustainability KPIs such as the proportion of sustainable suppliers or the CO₂ balance of procurement, the ecological and social responsibility Strengthen in sourcing. The strategic use of the right KPIs allows companies to identify bottlenecks, eliminate inefficiencies and improve their overall purchasing performance.

A modern cloud ERP system How simple system that supports monitoring of purchasing processes in real time, reduces costs and improves the quality of supplier relationships. The platform offers real-time data access, transparent analyses and automated processes that reduce errors, speed up processes, and therefore make purchasing and logistics more efficient.

The consistent application of purchasing KPIs — supported by advanced technologies — paves the way for long-term cost savings, an increase in competitiveness and a more sustainable procurement strategy. Companies that use these tools effectively can optimize their purchasing processes and gain a decisive advantage in global sourcing.

Frequently asked questions

Can the most important purchasing figures be defined in a contract with suppliers?
Yes, the most important indicators in purchasing can and should be defined in contracts with suppliers in order to define clear performance expectations and create a basis for evaluating supplier performance. Central KPIs such as delivery quality, OTIF ratio (on-time, in-full), response times for complaints or agreed cost savings goals are often reflected in framework contracts or service level agreements (SLAs) and serve as a basis for regular supplier evaluations and possible contract adjustments.

Can the purchase costs for orders fluctuate per buyer?
Yes, the purchase costs for orders can vary significantly depending on the buyer. Factors such as experience, negotiation skills, market knowledge and personal relationships with suppliers play a decisive role and can lead to significant differences in the terms achieved.

How can the efficiency of a delivery be measured?
The OTIF ratio (on-time, in-full) quantifies the punctuality and completeness of deliveries and therefore ensures a smooth process in production and sales.

How can you ensure compliance with a KPI?
Compliance with a KPI is ensured through systematic monitoring and clearly defined objectives. Regular performance reviews, combined with incentive systems for employees and suppliers, promote consistent compliance and continuous improvement of key figures in purchasing and logistics.

Can simple system be used to comply with KPIs in every industry?
simple system provides cross-sector solutions for KPI monitoring; companies from the automotive industry to mechanical engineering and healthcare benefit from the flexible platform. The software adapts to specific industry requirements and enables tailor-made KPI tracking. By integrating supplier evaluations, ordering processes and analysis tools, simple system supports the compliance and optimisation of purchasing KPIs in various sectors of the economy.