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Procurement controlling: definition and important aspects for buyers
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Procurement controlling in a nutshell:
Procurement controlling is the systematic planning, management and control of all procurement-related activities based on defined key figures and target values. For purchasing, it enables fact-based decision-making and the continuous optimization of procurement processes and costs.
Example: An automotive supplier implements a monthly procurement controlling dashboard that makes supplier performance (98% delivery reliability), purchasing volume (EUR 2.3 million), inventory range (23 days) and realized savings (EUR 185,000) transparent and shows deviations from the target values.
Contents
Introduction to procurement controlling
What is procurement controlling?
Procurement controlling refers to the process of planning, managing and controlling all procurement-related activities within a company. It is an essential part of strategic purchasing and aims to increase the efficiency of purchasing processes, reduce costs and ensure security of supply. By applying controlling methods, data is collected and analyzed in order to make well-founded decisions and continuously improve the performance of purchasing.
Core elements of procurement controlling
Significance for modern purchasing
In today's competitive environment, procurement controlling is indispensable for an effective purchasing organization. It enables transparency regarding costs, supplier performance and procurement risks. Targeted controlling enables companies to identify potential savings, optimize processes and support strategic decisions.
Guide: Procurement controlling - key figures and best practices for effective purchasing management
Application of procurement controlling
Procurement controlling uses key figures and analyses to increase the efficiency of purchasing. By monitoring costs, supplier performance and processes, well-founded decisions can be made and optimization potential identified.
Calculation example: Cost price comparison
Initial situation: A company purchases a component from two different suppliers and wants to determine the more cost-efficient option:
- Supplier A:some text
- Unit price: 15 €
- Order quantity: 1,000 pieces
- Discount from 1,500 pieces: 5%
- Transportation costs per delivery: 200 €
- Supplier B:some text
- Unit price: 14 €
- Order quantity: 1,000 pieces
- No quantity discount
- Transportation costs per delivery: 300 €
Calculation for supplier A:1. total unit costs without discount: 15 € * 1,000 = 15,000 €
2. as the order quantity is less than 1,500 units, no discount is applicable.
3. total costs: 15,000 € + 200 € (transportation) = 15,200 €
Calculation for supplier B:1. total unit cost: 14 € * 1,000 = 14,000 €
2. total cost: 14,000 € + 300 € (transportation) = 14,300 €
Result: Supplier B is the more cost-efficient option with total costs of €14,300 compared to Supplier A at €15,200.
Decision taking into account the quantity discount at supplier A:1. increased order quantity to 1,500 units to obtain discount
2. new unit price with 5% discount: 15 € * 95% = 14.25 €
3. total unit cost: 14.25 € * 1,500 = 21,375 €
4. total cost: 21,375 € + 200 € (transportation) = 21,575 €
5. average cost per 1,000 units: (21,575 € / 1,500 units) * 1,000 = 14,383 €
New result: Despite the volume discount, the average costs per 1,000 units for supplier A (€14,383) are higher than the total costs for supplier B (€14,300). Supplier B therefore remains the better option.
Evaluation and strategic findings
✓ Critical success factors
→ Key figure integration: systematic linking of operational and strategic KPIs for holistic procurement management
→ Process standards: Establishment of uniform controlling processes and reporting formats across all procurement areas
→ System support: use of integrated IT systems for automated data collection and evaluation
⚠ Challenges
→ Data consistency: Ensuring uniform data quality across different procurement categories and locations
→ Resource expenditure: Balance between depth of detail of the analyses and available controlling capacities
→ Action orientation: Deriving concrete measures from the controlling insights gained
◆ Strategic implications
→ Digitalization: automation of routine analyses to focus on value-adding activities
→ Competence building: development of analytical skills in the purchasing team
→ Control model: integration of procurement controlling into company-wide performance management
Future trends:
"The evolution of procurement controlling is leading from pure cost control to a strategic value driver."
→ Predictive analytics for demand and cost forecasts
→ ESG key figures Integration
→ Real-time monitoring of supply chains
→ AI-supported optimization recommendations
Conclusion on supplier evaluation
Procurement controlling is an indispensable tool of modern purchasing that optimizes the efficiency of procurement processes through systematic planning, management and control. The integration of digital technologies and AI-supported analyses not only enables cost savings, but also supports strategic decisions. The success of procurement controlling depends largely on the quality of the database, standardized processes and the consistent implementation of the insights gained. Only by continuously developing these components can procurement controlling sustainably increase its contribution to value creation in the company.
