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Procurement KPIs
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Spend to Revenue Ratio

Production Schedule Adherence

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Category:  
Strategic

Compares total procurement spend to the company’s revenue to determine the efficiency of the procurement function.

What it Measures ?

How much we spend on procurement for every rupee we earn.

Relevant StakeHolders 

CFOs, Business Unit Heads

Why it Matters ?

Aligns procurement efficiency with revenue goals.

In-depth Use Case / Real-world Example

A manufacturing company that produces electrical components calculates its Spend to Revenue Ratio by dividing total procurement costs by total revenue. If the company generates ₹500 crores in revenue and spends ₹100 crores on materials, the Spend to Revenue Ratio is 20%. This ratio helps determine whether procurement spending is proportionate to the company’s revenue and if it aligns with profitability goals.

KPI Definition

Business Value

Movement Direction

Sample Formula

Procurement Spend / Revenue

Should Aim For
1
2
3
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Purchase Order Accuracy Rate
Measures the percentage of purchase orders that are issued without errors in terms of quantities, prices, and specifications.
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Measures the percentage of procurement orders that are classified as urgent, typically requiring faster processing and delivery.
Supplier Fulfillment Efficiency
Measures how efficiently suppliers meet order requirements, including quantity, quality, and delivery schedules.
Sourcing Cycle Time
Measures the time taken to complete the sourcing process, from identifying suppliers to awarding contracts.
Invoice Rejection Rate
Measures the percentage of invoices rejected due to discrepancies or errors in billing.
Spend Managed Under Contracts
Measures the percentage of total procurement spend that is managed through formal contracts with suppliers.
e-Procurement Adoption Rate
Measures the percentage of procurement activities conducted through electronic or digital platforms rather than manual processes.
Procurement Efficiency Cost
Measures the total cost of procurement activities in relation to the value of goods and services procured.
Order Delivery Lead Time
Measures the time between placing an order with a supplier and receiving the goods.
Active Supplier Count
Measures the number of suppliers actively engaged in providing goods or services to the company.
Invoice Accuracy Rate
Measures the percentage of invoices received that are free from errors in terms of pricing, quantities, and terms.
Contract Approval Cycle Time
Measures the time taken to review, negotiate, and approve contracts from initiation to final approval.
Order Accuracy Percentage
Measures the percentage of orders that are received as requested without any discrepancies or errors.
Supplier Rework Rate
Measures the percentage of goods received from a supplier that require rework or corrections due to quality issues.
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