Effective strategic procurement is critical for the success of any organisation, as it can significantly impact the supply chain’s efficiency and effectiveness. To ensure that procurement activities are aligned with business goals and objectives, it is vital to establish and track key performance indicators (KPIs) that measure the success of the procurement function. 

This list of 20 strategic procurement KPIs includes a range of metrics that can help organisations track their procurement activities’ performance, identify improvement areas, and make informed decisions about optimising the procurement process. 

By regularly monitoring these KPIs, organisations can clearly understand the effectiveness of their procurement efforts and make data-driven decisions to drive continuous improvement.

Top 20 Strategic Procurement KPIs to consider for 2023

Key performance indicators (KPIs) that are commonly used to measure the effectiveness of strategic procurement:

1. Cost savings: This KPI measures the amount of money saved through procurement activities such as negotiated discounts, bulk purchasing, and the selection of lower-cost suppliers.
2. Supplier performance: This KPI measures the quality and reliability of suppliers, including factors such as on-time delivery, order accuracy, and overall performance.
3. On-time delivery rate: This KPI measures the percentage of orders delivered on time, which is essential for ensuring that goods and materials are available when needed.
4. Inventory turnover rate: This KPI measures the speed at which inventory is being used and replaced, which can impact the efficiency and effectiveness of procurement activities.
5. Purchase order accuracy: This KPI measures the percentage of accurate purchase orders, which can impact the procurement process’s efficiency and the supply chain’s overall effectiveness.
6. Supplier diversity: This KPI measures the extent to which an organisation is sourcing goods and services from a diverse group of suppliers, which can be essential for maintaining a strong and resilient supply chain.
7. Spend under management: This KPI measures the percentage of an organisation’s total spend that is managed through the procurement process, which can impact the effectiveness of procurement activities and the overall efficiency of the supply chain.
8. Procurement process cycle time: This KPI measures the time it takes to complete the procurement process, from identifying the need for goods or services to placing an order and receiving them.
9. Supplier risk: This KPI measures the risk associated with an organisation’s suppliers, including factors such as financial stability, capacity, and the potential for disruptions in the supply chain.
10. Contract compliance: This KPI measures the extent to which an organisation complies with the terms of its contracts with suppliers, which can impact the overall effectiveness of the procurement process.
11. The number of active suppliers: This KPI measures the number of suppliers an organisation is actively working with, which can impact the diversity and resilience of the supply chain.
12. Percentage of spend on local suppliers: This KPI measures the extent to which an organisation is sourcing goods and services from local suppliers, which can be important for supporting the local economy and reducing the supply chain’s carbon footprint.
13. Purchase order lead time: This KPI measures the time it takes for a purchase order to be processed and fulfilled, which can impact the efficiency of the procurement process.
14. Supplier quality score: This KPI measures the overall quality of an organisation’s suppliers based on factors such as the quality of the goods or services provided, compliance with contracts, and overall performance.
15. Supplier onboarding time: This KPI measures the time it takes to onboard new suppliers and integrate them into the procurement process, which can impact the efficiency and effectiveness of procurement activities.
16. Supplier consolidation rate: This KPI measures the extent to which an organisation consolidates its spend with a smaller number of strategic suppliers, which can impact the efficiency and effectiveness of procurement activities.
17. Percentage of spend on innovation: This KPI measures the extent to which an organisation invests in innovative products or services from its suppliers, which can be necessary for driving business growth and staying ahead of the competition.
18. Supplier payment performance: This KPI measures the timeliness and accuracy of supplier payments, which can impact the overall effectiveness of the procurement process.
19. Supplier onboarding success rate: This KPI measures the percentage of new suppliers successfully integrated into the procurement process, which can impact the efficiency and effectiveness of procurement activities.
20. Supplier development rate: This KPI measures the extent to which an organisation works with its suppliers to develop new products, services, or technologies, which can be essential for driving business growth and staying ahead of the competition.

In conclusion, this list of 20 strategic procurement KPIs provides a comprehensive overview of the critical metrics organisations can use to track the performance of their procurement activities. By regularly monitoring these KPIs, organisations can clearly understand the effectiveness of their procurement efforts and identify areas for improvement. 

By using these KPIs to optimise the procurement process, organisations can drive cost savings, improve supplier performance, and ensure they have access to the goods and services needed to meet their business goals and objectives. 

Ultimately, the use of these KPIs can help organisations to achieve a more efficient and effective supply chain, which can have a positive impact on their overall success