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Purchasing controlling: definition & important aspects
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Purchasing controlling in a nutshell:
Purchasing controlling is the systematic planning, management and control of all procurement-related activities based on defined key figures and processes. It enables purchasing to identify potential savings, measure process efficiency and make strategic decisions based on sound data.
Example: An automotive supplier implements a monthly purchasing controlling dashboard that demonstrates savings of EUR 2.3 million in the first half of 2023 by monitoring supplier prices, order quantities and process costs and leads to the optimization of the top 10 product groups.
Contents
Introduction to purchasing controlling
What is purchasing controlling?
Purchasing controlling refers to the systematic planning, management and monitoring of purchasing activities within a company. The aim is to make purchasing processes efficient, optimize costs and ensure the quality of purchased products and services. Purchasing controlling comprises various tasks, including the analysis of key purchasing figures, risk management, supplier management and cost control.
Why is purchasing controlling important?
Purchasing controlling offers numerous advantages for companies:
Increased efficiency: By systematically analyzing and optimizing purchasing processes, companies can save time and resources.
Cost control: Purchasing controlling helps to monitor and reduce purchasing costs by identifying and exploiting potential savings.
Risk management: Identification and minimization of risks that may arise in purchasing, such as supplier defaults or price fluctuations.
Improved supplier relationships: Long-term and trusting relationships with suppliers can be established through structured and transparent communication.
Strategic decision-making: Purchasing controlling provides important data and key figures that are necessary for well-founded decisions in purchasing.
Key figures in purchasing controlling
Various key figures are used in purchasing controlling to measure and manage performance. The most important of these include
- Purchasing costs: Total costs incurred for the purchase of goods and services.
- Cost per unit: Average cost per unit ordered, which helps to monitor price developments.
- Supplier evaluation: Evaluation of the performance and reliability of suppliers based on criteria such as delivery time, quality and price.
- Savings potential: Identification of areas where costs can be saved, for example through negotiations or alternative procurement sources.
- Average order quantity: Analysis of order quantities to optimize order cycles and reduce storage costs.
- Stock turnover: The number of times stock is completely sold and replaced within a certain period of time.
Methods and strategies in purchasing controlling
Buyers use various methods and strategies to effectively manage and optimize purchasing processes:
SWOT analysis
The SWOT analysis (strengths, weaknesses, opportunities, threats) helps to identify the internal and external factors that influence purchasing. This analysis supports the development of strategies to exploit strengths and opportunities and to minimize weaknesses and risks.
Benchmarking
By comparing your own purchasing processes and key figures with those of best-in-class companies, you can identify potential for improvement and adopt best practices.
Total Cost of Ownership (TCO)
The TCO method considers not only the acquisition costs, but all costs that arise over the entire life cycle of a product or service. This includes, for example, maintenance costs, operating costs and disposal costs.
Supplier management
Effective supplier management is crucial for purchasing controlling. This includes the selection, evaluation and development of suppliers as well as the maintenance of long-term partnerships.
Practical guide: Purchasing controlling - key figures and methods for efficient procurement
Calculate purchasing controlling: Important key figures and formulas
Calculating and analyzing key figures is a central component of purchasing controlling. Here are some of the most important key figures and their calculations:
Purchase costs
Purchase costs = (cost price + ancillary costs) × order quantityThis key figure includes all direct costs associated with the purchase of goods and services, including cost price, transportation costs and other ancillary costs.
Total Cost of Ownership (TCO)
TCO = acquisition costs + operating and maintenance costs + disposal costsThe TCO figure takes into account all costs incurred during the entire life cycle of a product or service in order to enable a more comprehensive cost analysis.
Supplier evaluation
Supplier rating = (quality rating × weighting) + (delivery time rating × weighting) + (price rating × weighting)This formula enables a holistic evaluation of suppliers based on several criteria, which can be weighted according to company priorities.
Savings potential
Savings potential = Current costs - Optimized costsBy identifying and implementing optimization measures, current costs can be reduced, leading to direct savings.
Stock turnover
Inventory turnover = turnover / average inventory levelThis key figure measures how often stock is completely sold and replaced within a certain period of time and helps to make warehousing more efficient.
Sample calculation:
Assume a company has the following parameters:
Cost price per unit:20 Euro
Additional costs per order:500 Euro
Order quantity:1,000 units
Purchase costs = (20 € + 0.5 €) × 1,000 = 20,500 euros
This calculation shows that the total purchasing costs for this order amount to EUR 20,500.
Purchasing controlling definition and translations
Procurement controlling, also known as purchasing controlling, is an internationally recognized discipline in the field of procurement management. For globally active companies, it is important to know the English terminology and to use it consistently in order to ensure clear communication and a consistent understanding within the international teams.
Purchasing controlling and technology: tools and systems
The integration of technology into purchasing controlling is crucial for the efficiency and accuracy of processes. Modern purchasing software and ERP systems offer numerous functions that make controlling easier:
Purchasing software
Specialized procurement software enables the automation of ordering processes, the management of supplier information and the real-time monitoring of key purchasing figures. Examples of such software include SAP Ariba, Coupa and Oracle Procurement Cloud.
Business Intelligence (BI) Tools
BI tools such as Tableau, Power BI or Qlik offer powerful data analysis and visualization functions that enable purchasers to analyze complex data volumes and create comprehensible reports.
Enterprise Resource Planning (ERP) systems
ERP systems integrate various business processes, including purchasing, warehousing and finance, and enable seamless data communication
Best Practices:
Data management: Implement robust data management strategies to ensure the quality and accuracy of purchasing data.
Standardization: Standardize purchasing processes and policies to promote consistency and efficiency.
Training and further education: Train your employees regularly in the latest controlling methods and tools.
Use of technology: Use modern technologies and automation tools to optimize purchasing processes and support controlling.
Continuous improvement: Establish a culture of continuous improvement by regularly reviewing and optimizing processes.
Conclusion
Purchasing controlling is an essential part of the procurement process for buyers. Well-implemented purchasing controlling makes a significant contribution to increasing efficiency, controlling costs and strengthening business relationships with suppliers. By systematically planning, managing and controlling purchasing activities, companies can ensure that their purchasing processes run smoothly and in line with the company's objectives.
The use of patterns and templates facilitates the development of a consistent and professional purchasing controlling strategy. In addition, technological solutions are playing an increasingly important role in the automation and optimization of the purchasing process. Regular reviews and adjustments to purchasing controlling ensure that it is always in line with current market conditions and company requirements.
Invest in the development and optimization of your purchasing controlling to secure long-term competitive advantages. A well-structured purchasing process not only promotes efficiency and transparency, but also the satisfaction of your suppliers and customers. With the right strategies and tools, you can lay the foundations for successful and sustainable business transactions.
