The most important purchasing key figures in detail

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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:

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Purchase volume

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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:

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• Product groups (e.g. raw materials, components, services)
• Organizational units (e.g. plants, subsidiaries)
• Regions or countries
• Strategic vs. operational procurement

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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.

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Savings

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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:

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• Cost avoidance: Avoided price increases or costs (e.g. through negotiations)
• Hard savings: Actual cost reductions compared to a defined baseline
• Savings implemented: Savings already realized
• Identified savings: savings potential that has been identified but not yet realized

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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.

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On-time delivery

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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:

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On-time delivery = (number of on-time deliveries / total number of deliveries) × 100%

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It is important to establish clear definitions of what is considered "on time". Possible approaches are

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• Precise delivery on the agreed date
• Delivery within a defined tolerance window (e.g. +/- 1 day)
• Delivery no later than the agreed date (just-in-time production)

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Low on-time delivery can lead to production losses, increased stock levels or special measures and should therefore be continuously monitored[7].

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Purchasing costs in relation to purchasing volume

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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:

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Purchasing cost ratio = (costs of the purchasing department / purchasing volume) × 100%

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The costs of the purchasing department typically include

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• Personnel costs (incl. ancillary costs)
• Material costs (office, IT, travel expenses, etc.)
• Costs for external services
• Proportionate overheads

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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].

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Average purchase value

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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:

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Average purchase value = total sales / number of sales

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A differentiated analysis can provide valuable insights, for example by segmenting by:

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• Sales channels (stationary vs. online)
• End devices (desktop, tablet, smartphone)
• Payment methods
• Customer groups or regions

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The aim should be to continuously increase the average purchase value through targeted measures such as cross-selling, product bundling or optimized pricing strategies.

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Success factors for an effective key performance indicator system

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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:

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Balanced portfolio of key figures

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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:

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• Costs and savings
• Quality and delivery service
• Process efficiency
• Innovation and development
• Sustainability and compliance

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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.

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Clear definitions and calculation methods

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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.

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Example of a savings calculation:

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• Baseline: Previous year's price or last price before negotiation
• Calculation period: 12 months after implementation
• Formula: (baseline price - new price) × quantity
• Consideration of factors: Currency effects, inflation adjustment, volume effects

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Only with clear definitions can key figures be meaningfully interpreted and compared - both over time and in benchmarking with other companies.

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Target values and derivation of measures

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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:

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• What activities are necessary to achieve the target values?
• Who is responsible for implementation?
• By when should interim targets be achieved?
• What resources are needed?

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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.

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Digitalization in purchasing controlling

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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.

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Advantages of digitization

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The use of digital tools in purchasing controlling offers numerous advantages:

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• Automated data collection: reduction of manual effort and susceptibility to errors
• Real-time monitoring: up-to-date key figures instead of outdated monthly reports
• Data integration: Merging data from different sources (ERP, SRM, supplier systems)
• Extended analysis options: Drill-down functions, trend analyses, forecasts
• Improved visualization: clear dashboards instead of complex tables

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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.

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Technological solutions

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Various technological approaches are available for the digitalization of purchasing controlling:

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• SRM systems: Offer integrated controlling modules with preconfigured key figures and dashboards
• Business intelligence tools: Enable flexible analysis and customized dashboards
• Spend management systems: Specialized in the analysis and optimization of purchasing volumes
• AI-based analysis tools: Automatically identify patterns, anomalies and optimization potentials

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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.

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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.

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Benchmarking with BME standards

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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.

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BME benchmark "Top key figures in purchasing"

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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.

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The benchmark is published in two versions:

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• Average values: Show the mean values of the participating companies, differentiated by sector and turnover category
• Best in class values: reflect the values of the best companies in each case and show what potential is achievable

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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.

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Practical use of benchmarks

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The following aspects should be taken into account when using benchmarks:

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• Ensure comparability: Select similar company size, industry and framework conditions
• Align definitions: Ensure that the key figures were calculated using the same methodology
• Holistic view: Don't just compare individual key figures, look at the big picture
• Root cause analysis: Understanding the reasons for deviations, not just trying to improve the figures

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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.

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Practical example: Implementation of a purchasing KPI system

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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:

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Initial situation and objectives

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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:

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• Making the value contribution of purchasing transparent
• Identifies weaknesses in processes and supplier relationships
• The basis for continuous improvement is
• Fact-based management of purchasing activities enables

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Procedure for implementation

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The company opts for a systematic approach in several steps:

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Step 1: Selection of relevant key figures

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Following an analysis of strategic goals and priorities, the following key performance indicators are defined:

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• Strategic: purchasing volume (total and by product group), savings, share of framework agreement volume
• Operational: order throughput time, costs per order process, number of order items per buyer
• Suppliers: On-time delivery, complaint rate, number of active suppliers per product group
• Risk/quality: single-source quota, perfect order rate, supplier concentration

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Step 2: Definition of the calculation methods

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Standardized definitions and calculation methods are specified for each key figure, for example:

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• Savings: Baseline = previous year's price, calculation over contract term (max. 12 months), consideration of market price changes
• Adherence to delivery dates: tolerance window +/- 1 day, based on confirmed delivery dates
• Order throughput time: Time from electronic notification of requirements to order initiation in working days

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Step 3: Technical implementation

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The company opts for a combined solution:

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• Introduction of an SRM module as an extension of the existing ERP system for operational data collection
• Implementation of a business intelligence tool for flexible analyses and visualizations
• Automated interfaces for data transfer without manual intervention

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Step 4: Setting target values

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Based on an analysis of the actual values and a comparison with BME benchmarks, ambitious but realistic target values are defined, for example:

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• Increase in on-time delivery from 82% to 95
• Reduction of active suppliers by 30%
• Increase in the framework agreement volume from 45% to 70%
• Savings of at least 3% of the influenceable purchasing volume

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Step 5: Rollout and training

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Implementation takes place step by step:

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• Pilot phase with selected product groups and key figures
• Training of all purchasing employees and relevant stakeholders
• Successive expansion to all product groups and key figures
• Regular review meetings to discuss the results

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Results after one year

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The implementation of the key performance indicator system is already showing clear effects after just one year:

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• Transparency about the actual purchasing performance
• Identification of weak points in processes and supplier relationships
• Documented savings of 4.2% of the controllable volume
• Increase in on-time delivery to 91% through targeted supplier development
• Process costs reduced by 22% through standardization and automation

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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.