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

Supplier management
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

Compliance
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)

Risk
Financial risk, supply chain risk, other risks

Allocation
Low-cost country sourcing, best country sourcing, global sourcing

Supplier reliability
Adherence to delivery dates and quantity stipulations

Internal benchmarking
Corporate comparisons with top-level KPIs, category spend ratio, category spend fragmentation, price deviations in regard to the same material, common suppliers

Sales coordination
External procurement share of the end product (BOM), sales plan/ purchasing plan -> deviation analysis

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SpendControl is a complete Procurement Controlling and Spend Management solution. It provides all functions, KPIs and measures needed for professional Spend Analysis.

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