5 Best Metrics to Evaluate Procurement Teams

Jan 11, 2023 | Best practices

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Jan 11, 20233 min read

Measuring procurement teams' performance is crucial to evaluating procurement effectiveness and value. Metrics include cost savings, supplier performance, sustainability, spend analysis, and risk management. By regularly monitoring performance, organizations can continuously improve procurement processes and achieve greater efficiency and cost savings. Key metrics offer an effective way to track progress and drive results.

Measuring the performance of procurement teams is important for organizations to evaluate the effectiveness and value of their procurement processes. Some of the best metrics to measure procurement teams include: 

  • Cost savings: Tracking cost savings includes savings from reduced prices for goods and services, as well as savings from reduced administrative and operational costs. With FactWise, procurement teams can generate savings of up to 25% across simple and complex spend categories. 
  • Supplier performance: Measuring supplier performance requires metrics such as on-time delivery, quality of goods and services, and supplier compliance. FactWise offers an extensive suite of key supplier analytics to help procurement teams make fact-based decisions and negotiate better. 
  • Sustainability: Organizations are increasingly interested in measuring the sustainability of their procurement processes using metrics such as carbon footprint, energy consumption, and waste reduction. 
  • Spend analysis: Measuring and analyzing the spend is important to understand the efficiency of the procurement process and identify potential cost savings opportunities. Users love that FactWise offers specialized features to manage different categories of spend across a spend matrix focused on oversight and urgency. 
  • Risk management: Measuring the effectiveness of the procurement team's risk management practices can help organizations identify potential risks and take steps to mitigate them. With FactWise, teams can increase their supplier diversity and reduce supplier risk in their procurement cycle.  

User stories (client request to keep the names confidential)

  • A retail company reported that they were able to reduce their carbon footprint by 20% and energy consumption by 15% after implementing sustainability metrics in their procurement processes.
  • A manufacturing company achieved 25% improvement in on-time delivery and 30% reduction in defects via close tracking of key supplier metrics.
  • A consulting company reported 20% cost savings opportunity by consolidating their spending on a specific category via spend analysis. 
  • A financial institution achieved 25% reduction in exposure to potential risk by measuring the effectiveness of the procurement team's risk management practices. 

In conclusion, effectiveness can be improved and maintaining by routinely measuring the performance of procurement teams using critical metrics detailed above. By regularly monitoring and analyzing the performance of their procurement teams, organizations can continuously improve their procurement processes and achieve greater efficiency and cost savings. 

About the Author

Stawan is the founder and CEO of FactWise. Before founding FactWise, Stawan was the NA TMT-Procurement Leader at McKinsey. Passionate about procurement, Stawan has 15 years’ experience in enabling clients of all sizes to achieve business impact via procurement.


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