What are KPIs?
KPI is the abbreviation for Key Performance Indicator. These indicators are key figures that monitor the transparency, successes or cost savings, compliance, process efficiency, risks and many other aspects of strategic purchasing. They also serve to recognize trends and other data patterns.
KPIs differ from “normal” purchasing numbers in that they significant on their own. Every single KPI in purchasing is extremely important for corporate management. The list below shows the most important key figure sectors or KPIs in strategic purchasing. The transitions between KPIs and key figures flow and are defined differently depending on the company:
Transparency in purchasing
Spend, amount, price, purchasing successes
Transparency (“negotiation sheet”), assessment of hard and soft facts incl. quality and supply reliability, similar suppliers and alternative suppliers, risk
Product group management
Transparency, purchasing successes, compliance, processes and automation, suppliers, working capital, allocation
Purchasing success and cost savings (cost reduction & cost avoidance)
MPV, spend flow accounts, measures, internal benchmarking, currency effects (gains/losses), market effects or cost driver effects, effect analyses (correlations), LLP and cost regressions, savings potential analyses
Capital and income statement integration
Budget deviations, measures
Order reference, contract reference, price compliance, supplier compliance (preferred supplier), data quality, risks and blocked suppliers (e.g. sanction lists), Maverick Buying Quote, use of the framework contract, payment conditions
Processes and automation
Buying channel, process automation, process cycle times, number of transactions and SLAs (SLA controlling)
Financial risk, supply chain risk, other risks
Low-cost country sourcing, best country sourcing, global sourcing
Adherence to delivery dates and quantity stipulations
Corporate comparisons with top-level KPIs, category spend ratio, category spend fragmentation, price deviations in regard to the same material, common suppliers
External procurement share of the end product (BOM), sales plan/ purchasing plan -> deviation analysis
Dashboards & Insights
Dashboards & Insights is a complete Procurement Controlling and Spend Management solution. It provides all functions, KPIs and measures needed for professional Spend Analysis.
With its standardized ERP interfaces you can connect the spend cube of Dashboards & Insights within a short time frame to any ERP system (e.g. SAP, Navision, Oracle etc.).
Here you will find important terms related to spend management explained in a clear way. Small knowledge base for quick information or in full for your further education. This controlling glossary is constantly being expanded and improved.
Read blog articles about spend management, initiative management and data management in procurement, or other articles from our experts.
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