Measures the total cost of procurement activities in relation to the value of goods and services procured.

What it Measures ?

How much procurement costs compared to goods bought.

Relevant StakeHolders 

Finance, Procurement Leadership

In-depth Use Case / Real-world Example

A manufacturing company producing steel beams calculates Procurement Efficiency Cost by dividing the total procurement cost (including administration, systems, and overhead) by the total value of goods purchased. For example, if the total procurement cost is ₹10 lakh and the total value of procured goods is ₹100 crore, the efficiency cost would be 0.01%. This KPI helps track the cost-effectiveness of procurement processes.