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Ordering costs: definition & important points for buyers
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Ordering costs in a nutshell:
Ordering costs include all internal costs incurred in the execution of an order, from the determination of requirements to invoice verification. Knowing and optimizing order costs is essential for purchasing, as they have a significant influence on the overall process costs and the optimal order quantity.
Example: A medium-sized company calculates order costs of 75 euros per order process, which are made up of 30 minutes of working time for order processing (35 euros), IT system costs (15 euros), quality control (15 euros) and invoice processing (10 euros).
Contents
Ordering costs - An introduction to purchasing controlling
What are order costs?
Ordering costs are the expenses incurred as part of the procurement process for the creation and processing of orders. They include all internal and external costs incurred when ordering goods or services. These include personnel costs for order processing, communication costs, costs for comparing offers and contract negotiations as well as administrative costs.
Core elements of order costs
Importance of order costs in purchasing
Controlling purchase order costs is essential for companies to ensure efficiency and cost effectiveness in purchasing. High ordering costs can significantly increase overall expenditure and impair competitiveness. By optimizing ordering processes, using digital tools and bundling orders, ordering costs can be reduced and resources used more efficiently.
Calculation of order costs in practice
The analysis of order costs helps procurement managers to identify potential savings and optimize processes. By precisely calculating the costs per order, cost reduction strategies can be developed.
Calculation example
Initial situation:
A company places 400 orders per year. The average costs per order are made up as follows:
- Processing costs: 30 €
- Communication costs: 10 €
- Negotiation costs: 15 €
- Administration costs: 20 €
Calculation of the order costs:
Total cost per order:
30 € + 10 € + 15 € + 20 € = 75 €
Annual order costs:
400 orders x €75 = €30,000
Optimization through order bundling:
If the company reduces the number of orders to 200 by bundling:
200 orders x €75 = €15,000
Savings:
30,000 € - 15,000 € = 15,000 € per year
Significant cost savings can therefore be achieved by reducing the frequency of orders.
Evaluation and strategic findings
✓ Critical success factors
→ Process optimization: systematic analysis and standardization of ordering processes to reduce throughput times
→ Digitalization: implementation of digital workflows and e-procurement solutions to reduce costs per order process
→ Order bundling: Strategic grouping of orders, taking into account storage costs and supplier conditions
⚠ Challenges and limitations
→ Complexity management: balancing order cost reduction and increasing demands for delivery flexibility
→ Cost allocation: Difficulty in allocating overhead costs to individual order transactions in accordance with the principle of causation
→ Process changes: Overcoming resistance to the introduction of new ordering processes and systems
Future trends and strategic implications:
"The future lies in the intelligent automation of the ordering process while at the same time optimizing overall process costs."
→ Predictive analytics for optimal order times and quantities
→ Blockchain-based ordering processes for increased transparency
→ AI-supported supplier selection and automatic order triggering
→ Integration of real-time cost monitoring in procurement decisions
Conclusion on ordering costs
Ordering costs are a key cost factor in the procurement process that can be optimized through targeted measures. The successful reduction of ordering costs is based on three pillars: the digitalization of processes, strategic order bundling and the use of modern analysis tools. Companies that actively manage their ordering costs and use new technologies such as AI and predictive analytics can not only achieve significant cost savings, but also strengthen their competitive position in the long term.
