A metric that combines various procurement performance measures, such as cost savings, cycle time, and supplier performance, to gauge overall procurement effectiveness.

What it Measures ?

Are we getting more value compared to what we spend on procurement?

Relevant StakeHolders 

Finance Teams, Process Improvement Analysts

Why it Matters ?

Optimizes resource efficiency in procurement.

In-depth Use Case / Real-world Example

A manufacturing company producing electric generators uses the Procurement Efficiency Index to evaluate how well its procurement function is performing. By looking at factors like cost reductions, on-time deliveries, and supplier collaboration, the company can calculate an index score. For example, if the company reduces costs by 15%, improves cycle time by 20%, and boosts supplier performance by 10%, the index score reflects the combined impact of these improvements on overall procurement efficiency.