Purchase volume * 100 / sale
In principle, the volume of purchases should remain constant in relation to sales or even decrease over several years. If the purchase volume increases faster than sales over a longer period of time, this is often a danger signal. If nothing is done, gross profit and profit will decrease. Liquidity is also affected. In the current situation of regular price increases, you should consider splitting the key figure into two: First, with a volume component (e.g. purchase volume * 100 / sales volume) and a volume component (purchase volume in euros * 100 / revenue). This makes it easier to see what is causing the changes. If, for example, the quantity component remains stable, the production process usually works well and there is “only” a cost problem. One of the things to do here is to look for ways to pass this on to the customer.
Quantity constituted at purchase
Order quantity at purchase * 100 / purchase quantity
The more order quantities processed at purchase, the better. Rule of thumb: as much as possible above 95%. With volume bundling, it is still possible today at least to achieve purchase prices that remain more stable as more volume is ordered. The smaller the volume, the less attractive you are to a provider. On the other hand, other employees are relieved and can concentrate on their core business. Exceptions should be defined where “hands-off” purchases are possible without purchase. For example, in a craft business, it rarely makes sense if a fitter has to have a part on site and has to contact the purchasing department, if he can buy it directly from the hardware store and thus continue his work immediately. If necessary, it must be checked how, for example, it is possible to equip fitters better or completely with the necessary material and tools.
Delivery on time suppliers
Number of deliveries on time * 100 / total number of deliveries
An important indicator of suppliers’ reliability: do they meet the promised deadlines? Are there (understandable) reasons for late deliveries? Are the reasons incomprehensible? Will there be delays in your own business as a result?
Complaint rate deliveries
Number of complaint deliveries* 100 / total number of deliveries
An important indicator of the quality of delivered products or goods: Which suppliers deliver (largely) flawlessly? Which ones have bigger problems with their products? Where, if any, are there other complaints, eg due to delivery dates or breaches of contractual agreements, eg because deliveries already promised are sent to third parties who offer a higher price at short notice?
the rate of price increase
Proportion of purchased items with price increases * 100 / total number of purchased items
The key figure can be used to check whether there are price increases across the board, or whether the price increases are limited to individual segments. If prices are rising in almost all areas, as is the case at the moment, it often makes sense to increase stocks and safety stocks.
Security of supply / ability to deliver
Percentage of on-time delivery to production * 100 / total number of deliveries
An important parameter, especially in the current situation. Shows whether and to what extent procurement is able to supply production with the necessary parts. If production stops, customers cannot be served or only partially; jumps may occur. If the values are low or decreasing (rule of thumb: from < 98-97%), the reasons should be investigated: Are these problems caused by purchases? Is the production planning of high quality? Does the sales department give difficulties, for example, if their plans are too imprecise?
Compliance with payment terms
Payments in accordance with payment terms (including discount) * 100 / total number of payment transactions
Metrics become more important in times when suppliers gain more power. The consistent compliance with payment terms serves, among other things, to maintain suppliers, but is also an indicator of the quality of accounting and procurement.
Percentage of costs caused by procurement (eg procurement cost center) * 100 / total costs
Reference to the effectiveness of procurement and its processes, as well as the degree of automation, if applicable. The value should at least remain stable or, if possible, fall over a longer period of time.
Price per order process
Purchasing costs (eg costs of purchasing cost centers) / number of orders
Indicator of purchasing efficiency. The lower the price per transaction, the better. If they fall over a longer period of time, it indicates good processes and organization in procurement. Order costs are often more than 100 euros per transaction. Therefore, low value orders should also be avoided or reduced in number as much as possible.
framework agreement rate
Purchase volume * 100 / total purchase volume
On the one hand, framework agreements can be used to better secure the supply over a longer period of time, for example a year. On the other hand, it relieves the purchase because you don’t have to make comparisons with each order. In order not to become too dependent on suppliers, framework agreements should be entered into with two suppliers for A products and other important goods.
small order rate
Number of small orders * 100 / total number of orders
Orders often entail correspondingly high costs, regardless of the order value. A high or increasing number of small orders (rule of thumb: <100-150 euros) shows that the benefit of large orders is not known or that there are organizational problems that lead to an unnecessarily high number of small orders, e.g. lack of procurement rules. Note: Code can also be created with urgent or emergency orders. A high number of rush/emergency orders may be an indication of inadequate planning or processes.
general supplier quota
Purchase volume through fixed suppliers *100 / total purchase volume
The more purchased items that can be purchased from regular suppliers, the cheaper it is usually, as framework agreements can often be concluded or orders can be easily processed if necessary, without major comparisons of offers or supplier evaluations. Existing savings opportunities tend to be used when there are a large number of regular suppliers. Conversely, a low value shows that the company is often looking for suitable providers and that a lot of work must be invested in this.