Purchasing KPIs are quantifiable metrics that serve as efficiency indicators for evaluating and managing a company's procurement processes. They represent empirically observable and systematically recordable values that objectively reflect the quality and performance of purchasing and create a basis for well-founded strategic and operational decisions. Key purchasing figures enable:
In today's complex procurement landscape, key purchasing figures have become indispensable. They have evolved from simple controlling instruments to strategic management tools that contribute significantly to a company's competitiveness. According to recent studies by the German Association of Materials Management, Purchasing and Logistics (BME), 43% of purchasing managers surveyed now rate both the performance and the importance of procurement in the company as high - a rising trend that underlines the growing importance of procurement.
The systematic collection and analysis of key purchasing figures enables companies to uncover cost-cutting potential, optimize processes and ensure security of supply. At the same time, they serve as an early warning system to identify potential risks in the supply chain in good time and initiate suitable countermeasures. Last but not least, purchasing indicators create a common language between purchasing and other areas of the company such as finance, production and management.
For effective purchasing controlling, it makes sense to structure the multitude of possible KPIs into logical categories. This makes it easier to select relevant KPIs for your own organization and prevents a confusing "KPI graveyard". The following categories have proven themselves in practice:
These key figures form the basis for long-term decisions and are closely linked to the company's objectives. They provide information on the strategic positioning and performance of purchasing:
These key figures relate to the efficiency of daily purchasing processes and provide information on productivity and process quality:
These key figures evaluate the quality and structure of the supplier portfolio as well as the performance of individual suppliers:
These key figures focus on quality assurance and risk management in procurement:
From the multitude of possible purchasing KPIs, some key KPIs have emerged in practice that are relevant in almost every company. These KPIs should be taken into account in any professional purchasing controlling system:
The purchasing volume is the basis for many other key figures and indicates the total value of all goods and services procured in a defined period. It is often broken down further into:
The proportion of the company's total procurement volume accounted for by the purchasing department is particularly meaningful. The higher this value, the greater the potential influence of the purchasing department on the company's total costs.
The quantification of savings through purchasing activities is one of the most important key figures for demonstrating the value contribution of purchasing. A distinction is made between different types of savings:
A uniform and transparent calculation method is crucial for the credibility of this key figure. The savings should always be considered in relation to the purchasing volume in order to assess the efficiency of the measures.
On-time delivery is a key indicator of supplier reliability and supply chain stability. It is typically calculated as a percentage of orders delivered on time:
On-time delivery = (number of on-time deliveries / total number of deliveries) × 100%
It is important to establish clear definitions of what is considered "on time". Possible approaches are
Low on-time delivery can lead to production losses, increased stock levels or special measures and should therefore be continuously monitored[7].
This key figure puts the internal costs of the purchasing department in relation to the total purchasing volume managed and is an important indicator of the efficiency of the purchasing organization:
Purchasing cost ratio = (costs of the purchasing department / purchasing volume) × 100%
The costs of the purchasing department typically include
According to the BME benchmark, the differences between average companies and the "best in class" in this key figure are often between 30 and 50 percent. This illustrates the considerable potential for optimization that still lies dormant in many purchasing organizations[5].
The average purchase value (or shopping basket) is a key performance indicator, particularly in the retail sector. It provides information about the purchasing behavior of customers and the effectiveness of marketing measures:
Average purchase value = total sales / number of sales
A differentiated analysis can provide valuable insights, for example by segmenting by:
The aim should be to continuously increase the average purchase value through targeted measures such as cross-selling, product bundling or optimized pricing strategies.
The mere collection of key figures does not guarantee added value for the company. To ensure that a purchasing controlling system actually contributes to improving purchasing performance, the following success factors should be taken into account:
An effective KPI system should be balanced and cover various dimensions of purchasing performance. The specialist literature describes more than 160 possible purchasing KPIs, but the art lies in limiting them to the essentials. A balanced set of 10-15 core KPIs covering the following aspects is recommended:
The principle should always apply: Less is more! Too much detail overwhelms the organization and clouds the view for the essentials. It is essential to avoid cemeteries of figures that are meaningless.
Uniform definitions and calculation methods should be established for each key figure in order to ensure consistency and comparability. These should be documented and made accessible to all stakeholders. A transparent methodology is crucial for the acceptance of figures within the organization, especially for more complex indicators such as savings.
Example of a savings calculation:
Only with clear definitions can key figures be meaningfully interpreted and compared - both over time and in benchmarking with other companies.
Key figures only develop their control effect if they are linked to specific target values. These should be ambitious but realistic and regularly reviewed. It is important to link them to specific measures:
This turns mere measurement into genuine performance management that leads to continuous improvement. The balance between different target dimensions should always be maintained in order to avoid one-sided optimization.
The manual collection and evaluation of key purchasing figures is time-consuming and prone to errors. Modern technologies offer considerable potential for increasing efficiency and gaining deeper insights into purchasing performance.
The use of digital tools in purchasing controlling offers numerous advantages:
These advantages turn purchasing controlling from a retrospective view into a proactive management tool that can point out deviations and the need for action at an early stage.
Various technological approaches are available for the digitalization of purchasing controlling:
The choice of the right system depends on the specific requirements, the existing IT landscape and the budget. Good integration into existing systems is important in order to avoid data silos and ensure a consistent flow of information.
A modern SRM system can, for example, automatically record data on orders, deliveries and invoices and calculate relevant key figures such as on-time delivery, complaint rates or process costs. Integrated dashboards provide purchasing managers with an up-to-date overview of performance at all times and allow them to react quickly in the event of deviations.
Your own purchasing figures become even more meaningful if they can be compared with those of other companies. The German Association of Materials Management, Purchasing and Logistics (BME) offers valuable guidance here.
Every year, the BME collects the most important purchasing key figures on quality, structures, processes and costs. The resulting benchmark report has been a reliable standard of comparison for purchasing departments for many years and includes 25 key figures for evaluating their own performance.
The benchmark is published in two versions:
The comparison between average values and best in class is particularly revealing. The differences are generally 30 to 50 percent, which illustrates the considerable potential for improvement in many companies.
The following aspects should be taken into account when using benchmarks:
A benchmark should not be seen as a rigid target, but rather as a guide. The specific framework conditions and strategic priorities of your own company must always be taken into account when interpreting and deriving measures.
To illustrate the practical implementation, we look at a medium-sized industrial company with an annual purchasing volume of 120 million euros that wants to introduce a structured KPI system:
The company already has an ERP system in which order data is recorded. So far, however, only a few key figures (purchasing volume, number of suppliers) have been collected unsystematically. The aim is to implement a comprehensive KPI system that:
The company opts for a systematic approach in several steps:
Step 1: Selection of relevant key figures
Following an analysis of strategic goals and priorities, the following key performance indicators are defined:
Step 2: Definition of the calculation methods
Standardized definitions and calculation methods are specified for each key figure, for example:
Step 3: Technical implementation
The company opts for a combined solution:
Step 4: Setting target values
Based on an analysis of the actual values and a comparison with BME benchmarks, ambitious but realistic target values are defined, for example:
Step 5: Rollout and training
Implementation takes place step by step:
Results after one year
The implementation of the key performance indicator system is already showing clear effects after just one year:
This example shows how a structured approach to implementing a purchasing KPI system can lead to measurable improvements. The decisive factor here is the combination of strategic orientation, clear definitions, technical support and the consistent derivation of measures.
Purchasing KPIs are indispensable tools for the strategic and operational management of modern procurement departments. They create transparency, reveal optimization potential and make the value contribution of procurement measurable. Increasing digitalization is making it easier and easier to collect and evaluate key purchasing figures, which opens up new opportunities for data-driven decisions. The following steps are recommended for the successful implementation and use of purchasing KPIs: