What is Procurement?
The Procurement function purchases products and services from vendors to satisfy internal (the company's employees) and external (customers) demand. They must monitor both supply and demand to ensure that materials are purchased at the right time and in the right quantity to avoid shortages. Procurement employees are responsible for identifying potential suppliers, selecting a supplier, negotiating vendor contracts and addressing various logistical concerns (shipping, delivery, installation, training, etc.). Procurement employees are also tasked with monitoring the performance of company suppliers as it relates to the terms of the contract that governs the relationship with the vendor. If the vendor's performance is found to be unsatisfactory, procurement employees should determine whether to assist the vendors in improving their performance, or to find new vendors.
Supply Chain Benchmarking ReportBenchmarking Report Bundle
Vendor Payment Processing Cycle TimeBenchmarking Report
Procurement KPI EncyclopediaKPI Encyclopedia
Procurement Best Practices GuideBest Practices Guide
Procurement Organization Chart TemplateOrg Chart Template
Customer & Vendor SetupWorkflow Template
Vendor Payment Processing Cycle Time
The number of business days required to process an invoice from a company supplier, or vendor, from when the invoice is received by the Accounts Payable Department until it is approved and s...
KPI Type : Service
Formula : (Sum of Vendor Payment Cycle Times) / Number of Vendor Payments Approved and Scheduled to Pay
KPI Benchmark Range : 3.5-11.8
A typical procurement function is composed of several common sub-functions, or teams, that work together to monitor and purchase required supplies and services, and manage ongoing relationships with third-party company vendors, or suppliers. Browse our Procurement organization chart page to learn about the roles and responsibilities of each major function. Then, download our org chart template (PDF, Visio, PPT) to further understand the procurement organizational structure, and support improvement efforts within procurement operations.
Check out our procurement best practices page to view selected descriptions of work methods that have been proven to produce better results (as compared to other, similar methods). Want more? Download our Procurement best practices guide, which provides a healthy selection of valuable best practices that can be incorporated to improve procurement operations. There might not be only one "best" way to perform every task. However, there is always a "better" way.