Procurement KPIs that matter
A compact set of measures for delivery, quality, cost and coverage — with formulas and common pitfalls.
A good KPI set is short, clearly defined and tied to decisions. These measures cover most procurement teams' needs.
Delivery and quality
- On-time delivery (OTD) = orders delivered on time ÷ total orders. Define "on time" (for example within an agreed window) and keep the definition stable.
- Defect rate = defective units ÷ units received; often shown as parts per million (PPM).
Speed
- Procurement cycle time = average days from approved requisition to issued PO (or to receipt). State the start and end points.
Cost
- Purchase price variance (PPV) = actual spend − standard spend for the same quantities. Negative is favourable.
- Savings = baseline spend − actual spend, reported as realised or projected. Keep cost avoidance separate.
Coverage
- Spend under management = spend managed by procurement ÷ total spend.
- Contract compliance = spend at contracted prices with contracted suppliers ÷ category spend.
Pitfalls
- Measuring what is easy rather than what matters.
- Changing definitions between periods.
- Reporting savings that never reach the budget.
Use the KPI calculator to compute these from raw counts and export them with their formulas.