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Purchasing volume: definition & important aspects
Purchasing volume in a nutshell:
The purchasing volume describes the total monetary value of all goods and services procured by a company in a defined period. For purchasing, this is a key figure for evaluating purchasing power, supplier management and strategic planning of procurement activities.
Example: A medium-sized production company has an annual purchasing volume of 25 million euros, of which 60% is accounted for by direct materials, 25% by indirect materials and 15% by services.
Contents
Introduction to the purchasing volume
What is purchasing volume?
The purchasing volume refers to the total quantity of goods and services that a company purchases within a certain period of time. It is a key indicator of purchasing activities and provides insights into the company's procurement behavior. The purchasing volume can be measured in various units, such as number of units, weight, volume or in monetary terms.
Why is purchasing volume important?
The purchasing volume plays a central role in several areas of purchasing management:
- Cost control: By analyzing purchasing volumes, companies can identify potential savings and negotiate better conditions with suppliers.
- Supplier management: A high purchasing volume can strengthen the negotiating position with suppliers and promote long-term partnerships.
- Requirements planning: Understanding the purchasing volume helps with precise requirements determination and warehouse management.
- Budgeting: The purchasing volume is an important factor in the preparation of purchasing budgets and financial planning.
- Performance measurement: Purchasing volume serves as a key figure for evaluating purchasing performance and identifying opportunities for improvement.
Importance of purchasing volume for companies
For buyers, purchasing volume is a fundamental key figure that covers several important aspects:
- Cost control: A clear understanding of purchasing volumes helps to monitor and control expenditure.
- Supplier management: Higher purchasing volumes can lead to better conditions and discounts, as suppliers often offer incentives for larger purchase volumes.
- Budget planning: The purchasing volume supports the creation of precise budgets and the planning of future expenditure.
- Performance measurement: By integrating the purchasing volume into key performance indicators (KPIs), the efficiency and effectiveness of the purchasing department can be evaluated.
Methods for calculating the purchasing volume
The purchasing volume can be calculated in various ways, depending on the specific requirements and data availability of a company. A common formula is:
Purchase volume = number of units ordered × price per unit
This simple calculation enables the purchasing volume to be determined quickly. However, for a more precise analysis, the purchasing volume can also be calculated taking into account other factors such as supplier prices, discounts and payment terms.
Another important key figure is the purchasing volume as a percentage of sales. This ratio provides information on how much of the generated turnover is spent on purchasing and helps to evaluate purchasing strategies in relation to company performance.
Calculate purchasing volume: Detailed methods and examples
Precisely calculating the purchasing volume is essential for a well-founded purchasing strategy. In addition to the simple formula, there are advanced methods that take additional factors into account:
- Consideration of rebates and discounts: Suppliers often grant rebates for larger purchase quantities or quick payments. These must be included in the calculation in order to correctly determine the actual purchasing volume.
- Inclusion of storage costs: High order quantities can lead to increased storage costs. A holistic calculation of the purchasing volume should therefore also take storage costs into account.
- Analysis of order frequency: The frequency of orders can influence the purchasing volume. Regular, smaller orders can have different effects on the purchasing volume compared to less frequent, larger orders.
Sample calculation:
Let's assume a company orders 1,000 units of a product at a price of 50 euros per unit. In addition, it receives a volume discount of 5%.
Basic purchasing volume:
1,000 units × 50 euros = 50,000 eurosDiscount-adjusted purchasing volume:
50,000 euros × 0.95 = 47,500 euros
This detailed calculation enables a more accurate assessment of the actual purchasing volume and supports better decision-making processes in purchasing.
Purchase volume definition and translations
Purchasing volume is a universally recognized key figure in international procurement. 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.
Influence of purchasing volume on corporate strategy
The purchasing volume has a direct impact on the entire corporate strategy:
- Negotiating power: A higher purchasing volume strengthens negotiating power with suppliers, which can lead to better prices and conditions.
- Cost optimization: By analyzing the purchasing volume, inefficient expenditure can be identified and reduced.
- Risk management: A diversified purchasing volume across different suppliers and products can minimize the risk of supply bottlenecks and price fluctuations.
- Sustainability and compliance: Controlling the purchasing volume also supports adherence to sustainability targets and compliance guidelines by making purchasing decisions transparent and comprehensible.
Purchasing volume as a percentage of sales: significance and application
The key figure "purchasing volume as a percentage of sales" provides a valuable perspective on the efficiency of the purchasing department in relation to the company's overall performance. It is calculated as follows:
Purchasing volume as a percentage of sales = (purchasing volume / sales) × 100
This key figure makes it possible to evaluate the share of purchasing expenditure in total sales and to identify trends in purchasing behavior. A low percentage can indicate an efficient purchasing strategy, while a high percentage can indicate potential savings or inefficient purchasing processes.
Example:
A company with an annual turnover of 2,000,000 euros and a purchasing volume of 500,000 euros has:
(500.000 / 2.000.000) × 100 = 25%
This means that 25% of turnover is spent on purchasing. By regularly monitoring this key figure, companies can adjust their purchasing strategies to optimize the percentage and thus increase profitability.
Purchase volume formulas and tools for calculation
In addition to the basic formula, there are various tools and software solutions that make it easier to calculate and analyze purchasing volumes. Modern purchasing software can automatically aggregate data from various sources and create detailed reports that enable in-depth analysis. These tools help buyers to continuously monitor purchasing volumes and make informed decisions.
Some common formulas for expanding the purchase volume calculation include:
- Average purchasing volume per order:
Total purchasing volume / number of orders - Annual purchasing volume per supplier:
Purchasing volume of a supplier / number of suppliers
These extended calculations provide additional insights and help to identify specific areas for optimization.
Challenges and best practices in managing the purchasing volume
Managing the purchasing volume can be associated with various challenges:
- Data integrity: Data accuracy is crucial for correctly calculating and analyzing the purchasing volume.
- Market fluctuations: Price changes and supplier availability can influence purchasing volumes.
- Internal communication: Close cooperation between purchasing, finance and other departments is necessary in order to manage purchasing volumes effectively.
Best Practices:
- Regular review: The purchasing volume should be regularly reviewed and analyzed in order to identify trends at an early stage.
- Use automation: Using purchasing software to automate data collection and analysis.
- Training and further education: Ongoing training of purchasing staff to strengthen their understanding and skills in dealing with purchasing volumes.
- Strategic supplier selection: Building long-term partnerships with suppliers that guarantee reliable delivery and competitive prices.
Conclusion
The purchasing volume is an essential key figure that goes far beyond the simple recording of expenditure. It provides in-depth insights into the efficiency and effectiveness of a company's purchasing processes and enables buyers to make informed strategic decisions. By accurately calculating and continuously analyzing purchasing volumes, companies can not only optimize their costs, but also strengthen their negotiating position and build sustainable supplier relationships. Ultimately, a comprehensive understanding of purchasing volumes makes a significant contribution to increasing a company's competitiveness and long-term success.
