How to measure procurement KPIs

Procurement leaders can establish a data-driven decision-making process by consistently measuring procurement key performance indicators (KPIs). This helps demonstrate the value procurement is delivering and how its operations is directly impacting the organization’s bottom line.

The key to continuous improvement is selecting KPIs that directly align with the procurement strategy and business objectives. Once KPIs are defined, they need to be categorized to extract a balanced view of procurement performance. They can be grouped based on factors such as costs, efficiency, quality, value, innovation, and more. After grouping, a baseline and appropriate SMART targets need to be set.

Procurement software and other automation tools can help automate data collection, visualize it, and extract insights from spend analysis to demonstrate the current state of procurement KPIs. These KPIs can, in turn, help identify areas for improvement in process optimization, training needs, and even strategic adjustments.