Procurement KPIs & Metrics You Should Focus on and Measure

May 2, 2025 by Medigroup

You know how sometimes you just know a restaurant is on its game? The food is great, it arrives on time, and the staff seems genuinely happy. Well, in the world of business—especially when it comes to how organizations buy stuff (that’s procurement, by the way)—there are ways to tell if things are running smoothly. And those ways often come down to something called Key Performance Indicators, or KPIs.

Whether you’re just starting out in your career or you’ve been in the field for quite some time, understanding these “KPIs for procurement”—yeah, that’s one of the terms we have to talk about—can really shed light on how well an organization is managing its resources. Think of them as the scorecards for the procurement team.

What Exactly Are These Procurement KPIs Anyway?

Good question! Simply put, “purchasing KPIs,” or “key performance indicators for purchasing,” as some folks like to call them, are measurable values that show how effectively a company is reaching its procurement goals. They help answer questions like, Are we saving money? Are we getting good quality? Are our suppliers reliable? You get the picture.

Honestly, without these metrics, it’s like trying to drive somewhere without a map—you might get there eventually, but you’ll probably take a few wrong turns and waste some gas along the way. Procurement KPIs help keep everyone on the right track.

Must-Track Procurement KPIs

Alright, let’s get down to brass tacks and look at some of the most important “purchasing performance indicators” out there.

Cost Savings KPIs
We think this one should go without saying. We are talking about the amount of money that the procurement team is saving the business. There are several ways to measure this. Cost avoidance, for example, is the procedure for avoiding a cost altogether, such as by negotiating a lower price before placing the order. Next is price variance, which compares the price you actually paid with the price you were expecting to pay. You can figure out whether you’re getting the most value for your money by keeping an eye on these parameters.

Quality KPIs
Saving money is amazing, but not if you’re purchasing a lot of items that break down as soon as you receive them. The quality of the products and services being bought is the main focus of these KPIs. Consider factors like the defect rate: how often do the products you buy have issues? Or possibly supplier quality ratings, in which you assess your suppliers according to the quality of their final product. Doesn’t that make sense? You want reliable stuff from reliable partners.

Spend Under Management KPIs
This one may seem somewhat technical, but it’s really quite simple. It describes the percentage of an organization’s overall spending that is actively controlled by the procurement team. Most businesses aim to have 80-85% of spending monitored and managed. What makes this significant? More control, better negotiating positions, and eventually more potential for efficiency and savings result from better spending management.

Delivery KPIs
Being on time is essential today, when one missed call can result in hundreds of thousands of dollars in losses. These KPIs monitor the consistency of your suppliers’ delivery of goods and services. The percentage of orders that arrive on time is known as the on-time delivery rate, and it is one of the key indicators in this context. Lead time, or the time period between placing an order and receiving it, is another important one. A more flexible supply chain usually comes with shorter lead times, which results in a better image and positive reputation.

Employee-Related KPIs
We sometimes pay so much attention to the numbers that we ignore the people who generate them. The employees themselves are analyzed by these KPIs. You can determine whether the team is learning and developing continuously and efficiently by looking at things like the number of training hours each employee has received, and the amount of money spent on these training sessions. Additionally, although it may sound a little sentimental, performance in the department can be considerably affected by employee satisfaction. Teams that are engaged and happy are generally more productive, wouldn’t you agree?

Diversity and Local Sourcing KPIs
The importance and benefits of collaborating with a range of suppliers, including small companies and local businesses, are becoming increasingly apparent to organizations. KPIs in this sector could monitor the proportion of money spent with local vendors or with a variety of suppliers. It can result in supply chains that are more flexible and resilient, so it’s not just about doing good today; it’s about doing good all the time.

Why Your Service Provider Choices Matter

On paper, all of these KPIs look nice and bring a lot to your business, but they don’t track themselves. Selecting the appropriate service providers is at least 50% of the process. Consider this: how simple do you think it will be to precisely monitor these metrics if your procurement processes are managed by outdated software or a complex system? Not very easy, is it?

For this reason, choosing a service provider with the appropriate tools and capabilities is essential to successful KPI management, and it doesn’t matter if you are a medical group, a restaurant, or a bakery shop. Experts use the platforms and analytic tools you need in order to collect information, monitor growth, and pinpoint areas that might need changes or improvements.

Let’s not undervalue the significance of proper contract negotiation when discussing providers. To be honest, your KPIs can be significantly impacted by the conditions you agree to in your contracts. MediGroup, for instance, helps you find vendors in the healthcare field who provide the highest quality products and services without making you go bankrupt. Negotiation matters, and contacting experts in your field should be at least considered a good idea.

Summing Up…

So, there you have it—an overview of the topic of purchasing performance indicators that are necessary to monitor if you want your business to function properly. Additionally, even though it may initially seem like a lot of numbers and technical terms, keep in mind that ultimately, it all comes down to making smart and informed choices and securing the best deal. And who wouldn’t want that? Contact MediGroup to learn more and maybe find the vendor you’ve been looking for for a long time!