The Five Important KPIsNeeded for  Procurement Dashboards

In most procurement dashboards, KPIs are a must in order to establish the type of information one wants to get from the procurement dashboard. With the help of these KPIs, the company’s procurement department can start working on what to improve when they start creating a procurement plan for the company.

These KPIs are often taken for granted, but we at Procurement Tactics believe that these KPIs are very important to take note of. These KPIs will determine exactly what the procurement team needs when they start the procurement process.

Each of these KPIs is but a small fraction of what the Negotiation Gamechanger can teach you. Our classes are made to help the modern procurement manager in taking charge of a world where procurement means everything for a company’s growth and survival.

So without further ado, it’s time to take a look at the five important KPIs needed for procurement dashboards:

1. Compliance Rate

This is a procurement KPI that is crucial when it comes to determining the final quality of a product. It measures the percentage of products received from suppliers that do not meet the compliance specifications and quality requirements. The supplier defect rate is more critical in some industries that have high-risks and multi-tiered supplier bases like the aerospace and defense or the automotive. 

Tracking your different suppliers’ defect rates and breaking them down into defect types will provide you insights on which supplier is more performant and reliable than others, and what type of errors are done.

2. Purchase Order Cycle Time

The purchase order cycle time is a procurement KPI that covers the end-to-end ordering process, from the moment a purchase order is created to the order approval, receipt, invoice, and finally payment of the order. 

It focuses on the order and does not include the creation and delivery of the product or material itself.

3. Supplier Quality Rating

The quality rating is one of the supplier performance metrics critical in evaluating present as well future relationships with suppliers. If the designated supplier continuously delivers a lower quality score, then their status may be downgraded, or corrective measures implemented until issues in the supply chain are resolved. 

For example, if the supplier availability was low, and you cannot rely on their stock, your business can, consequently, suffer due to a lack of products. Therefore, it’s only important that a potential supplier should have a great supplier quality rating in accordance with your company’s procurement dashboard.

4. Supplier Availability

Supplier availability is a procurement KPI that refers to the number of times goods were available on the supplier’s side, or to the number of orders placed with the supplier. In an era of fast-changing consumer habits, where the lines between different channels are blurred, and where mobile-commerce, online purchases, in-store consumer-specific marketing all merge in one retail experience, it is important to manage suppliers as efficiently as possible to guarantee the availability of stocks. By monitoring the evolution of your supplier’s availability of stocks, you know the degree of reliability you can place in them.

5. Supplier Defect Rate

This is a procurement KPI that is crucial when it comes to determining the final quality of a product. It measures the percentage of products received from suppliers that do not meet the compliance specifications and quality requirements. The supplier defect rate is more critical in some industries that have high-risks and multi-tiered supplier bases like the aerospace and defense or the automotive. 

Tracking your different suppliers’ defect rates and breaking them down into defect types will provide you insights on which supplier is more performant and reliable than others, and what type of errors are done.