With the “top key figures in purchasing”, the German Federal Association of Materials Management, Purchasing and Logistics (BME) presents one of the most comprehensive benchmark analyses of processes and costs in purchasing in Europe every year. We have summarised the top ten key figures from the latest analyses for 2018 and 2019 below.
Definition: What KPIs are
KPI stands for Key Performance Indicator. KPIs are key metrics that reflect a company's performance. Companies use KPIs in purchasing, for example, to check the success of certain activities in the company. In this context, key figures serve as a basis for information and documentation, for controlling and planning, as a basis for decision-making, for pointing out and observing developments, and as a basis for comparison.
The 10 most important key figures at a glance
Key figure 1: Purchasing costs
Hardly any other key figure in purchasing illustrates the efficiency of the processes as well as the purchasing costs in relation to the procurement volume. According to BME, these decreased from 1.7% to 1.66% in 2019 compared to the previous year. In recent years, this figure has fluctuated between 1.5% and 1.7%.
Key figure 2: Purchasing volume in percentage of sales
This key figure provides an overview of structural differences between individual industries in terms of their own value creation. According to BME, the number increased slightly to around 47%, which was still within the range observed over many years.
Key figure 3: Purchasing volume per employee
According to BME, the purchasing volume per buyer has declined steadily over the past ten years, as many purchasing departments have increased staff. In 2019, the value was just under ten million euros per year.
Key figure 4: Costs per ordering process
For a long time, the indicator for operational efficiency was well over 100 euros. After a decrease to 97 euros in the 2018 evaluation, costs then rose sharply compared to the previous year at 103 euros. However, the significant increase is primarily due to the information provided by a single company. Without this consideration, the figure would be further below the 100 euro threshold.
Key figure 5: Purchasing volume responsible for purchasing
The BME report shows that purchasing covers the majority of the procurement volume in German companies. In recent years, the key figure has remained very stable between 85 and 90%, both for large companies and medium-sized companies. At around 87%, the 2019 value was within the range of fluctuation. However, the study also showed that a considerable proportion of at least 10% of procurement still misses out on purchasing and is done using Maverick Buying.
Key figure 6: Purchasing volume through long-term contracts
This key figure is considered an important indicator of the effort required in purchasing, which is significantly lower for long-term contracts than for so-called spot orders. According to “Top Key Figures in Purchasing 2018”, the share of long-term contracts in purchasing volume has remained almost unchanged at 50% for years. Many of these long-term contracts are still processed manually, and the proportion of automatically triggered orders has been stagnating for years.
Key figure 7: Continuing education costs
Requirements and job profiles in purchasing have changed significantly in recent years. However, the 2018 study showed that spending on continuing education was stagnating in German purchasing departments. There is no shortage of opportunities: the BME alone offers around 1,000 courses in a wide variety of formats nationwide for continuing education in purchasing.
Key figure 8: Adherence to delivery dates and number of complaints
On-time delivery and the number of complaints are two of the most important KPIs in purchasing, as they provide insights into performance. Fortunately, both key figures improved again in 2018. According to the study, adherence to delivery dates was high, and the number of complaints was low.
Key figure 9: Retrieval rate from framework agreements and catalogues
The retrieval rate from framework agreements and catalogues is also part of the key figures in purchasing published by the BME. According to the 2018 study, just under half of all orders were retrieved from framework agreements and catalogues.
Key figure 10: Credit terms and cash discount
According to the BME, in 2017 and 2018, the average payment term was 30 days, while the volume processed via cash discount remained at 35%.
Key figures remain stable — purchasing must do more self-marketing
The figures from the analyses from 2018 and 2019 confirm the trend of stable processes and structures in purchasing. There are no dramatic changes. However, it was also true that many companies did not implement the purchasing strategy as planned: every second buyer is still more operationally active.
According to Andreas Hermann, Head of Benchmark Services at BME, companies do not sufficiently recognise the importance of purchasing. “In almost every third company, purchasing comes below divisional management such as finance or central services. A lot of work still needs to be done here in terms of self-marketing.”