Procurement Glossary
Ordering costs: definition, calculation and optimization in Procurement
November 19, 2025
Ordering costs are a central cost factor in procurement, comprising all expenses incurred in the processing of ordering transactions. These costs have a significant influence on the efficiency of purchasing processes and the optimum order quantity. Find out below what ordering costs are, how they are calculated and what strategies exist for optimizing costs.
Key Facts
- Order costs include all direct and indirect costs of order processing
- They are independent of the quantity ordered and are charged per order transaction
- Typical order costs are between 25-150 euros per order
- Digitization can reduce ordering costs by up to 70%
- Optimal order quantities are determined by the ratio of order costs to storage costs
Contents
Definition: Ordering costs
Order costs are all costs incurred in the execution of an order, irrespective of the quantity ordered.
Components of order costs
The ordering costs are made up of various cost elements:
- Personnel costs for determining requirements and order processing
- Communication costs (telephone, e-mail, portals)
- System costs for ERP and e-procurement systems
- Administrative costs for documentation and archiving
Ordering costs vs. procurement costs
While ordering costs only relate to the processing of individual ordering processes, total cost of ownership covers all procurement-related costs. Activity-based costing helps to determine the exact ordering costs.
Importance of order costs in Procurement
Ordering costs are crucial for optimizing order quantities and frequencies. They flow directly into the calculation of the economic order quantity and influence working capital management.
Methods and procedures
Various methods enable the systematic recording and optimization of order costs.
Cost recording and analysis
Order costs are determined precisely by means of a detailed cost driver analysis. All process steps are recorded and evaluated, from the notification of requirements to invoice processing.
- Time recording for all order activities
- Allocation of personnel costs to ordering processes
- Evaluation of IT and infrastructure costs
Optimization strategies
Targeted measures can significantly reduce ordering costs. Process costs can be reduced through automation and standardization.
Economical order quantity determination
The optimum order quantity balances order costs and storage costs. Higher ordering costs lead to larger optimal order quantities, while lower ordering costs allow more frequent orders.
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Key figures for controlling order costs
Systematic key figures enable continuous monitoring and optimization of order costs.
Basic order cost KPIs
The most important key figures for order cost control include absolute and relative cost measurements. Procurement cost center reporting provides the necessary data basis.
- Order costs per order (absolute)
- Order costs per purchase volume (%)
- Average order processing time
- Degree of automation of the ordering processes
Efficiency and productivity indicators
Productivity measurements show the development of order cost efficiency. Benchmarking with industry-standard values allows you to evaluate your own performance.
ROI analysis of optimization measures
The ROI in Procurement measures the profitability of investments in order cost optimization. Savings are compared with the implementation costs.
Risk factors and controls for ordering costs
Insufficient control of ordering costs can lead to considerable inefficiencies and additional costs.
Hidden cost components
Often not all cost factors are taken into account when calculating order costs. Hidden costs arise due to incomplete recording of process steps or a lack of allocation of indirect costs.
- Reworking costs for incorrect orders
- Costs for supplier communication and support
- Quality inspection and complaint costs
Process risks and inefficiencies
Manual processes and a lack of standardization unnecessarily increase ordering costs. The cost-benefit analysis helps to evaluate optimization measures.
Compliance and control risks
Insufficient controls can lead to maverick buying and uncontrolled ordering costs. Controlling in Procurement must implement appropriate monitoring mechanisms.
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Practical example
A medium-sized production company analyzes its ordering costs and discovers that an average of 85 euros is incurred per order. By implementing an e-procurement system and automating routine orders, ordering costs can be reduced to 35 euros. This enables more frequent ordering of smaller quantities and at the same time reduces storage costs by 20%.
- Detailed process analysis of all order steps
- Implementation of automated approval workflows
- Continuous monitoring of cost savings
Current developments and effects
Digitalization and new technologies are fundamentally changing the structure and level of ordering costs.
Digital transformation in Procurement
E-procurement systems and automated ordering processes significantly reduce manual activities. Artificial intelligence supports demand forecasting and automatically optimizes ordering times.
- Automatic order triggering for minimum stock levels
- AI-supported supplier selection
- Digital approval workflows
Effects of AI on ordering costs
Artificial intelligence is revolutionizing order cost optimization through predictive analytics and automated decision-making. Machine learning algorithms analyze historical data and continuously optimize order parameters.
Sustainability and compliance
New compliance requirements and sustainability criteria initially increase ordering costs, but lead to more efficient processes in the long term. Purchasing controlling must take these developments into account.
Conclusion
Ordering costs are a critical success factor for the efficiency of purchasing processes and have a significant influence on the optimal ordering strategy. Systematic analysis and targeted digitalization measures can lead to significant cost savings. Continuous monitoring using suitable key figures enables sustainable optimization of the order cost structure and contributes to increasing overall efficiency in Procurement .
FAQ
What are typical order costs per order?
Typical ordering costs vary between 25 and 150 euros per order, depending on the size of the company and the degree of automation. Highly automated systems can reduce these to less than 10 euros, while manual processes often cost over 200 euros.
How do you calculate the optimum order quantity?
The optimum order quantity results from the formula √(2 × annual requirement × order costs / inventory cost rate × cost price). Higher order costs lead to larger optimal order quantities in order to minimize the total costs.
What factors influence the order costs?
Ordering costs are mainly influenced by the degree of automation, process efficiency, supplier complexity and approval procedures. Standardized processes and digital systems significantly reduce costs, while complex approval procedures increase them.
How can ordering costs be sustainably reduced?
Sustainable reductions are achieved through process automation, supplier consolidation, framework agreements and self-service portals for end users. It is important to continuously measure and optimize processes and train the employees involved.
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