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Procurement Operating Expense as a Percentage of Managed Spend measures the total operating-relating expense incurred by the Procurement Department in relation to the dollar amount the Procurement Department has spent on purchases over the same period of time, as a percentage. A lower than average value for this metric is typically related to a few common factors, including non-compliance to company policies and procedures concerning purchases, general inefficiencies within Procurement Department processes (e.g., miscommunications concerning procurement forecasts, misunderstandings over what products/services are needed, inefficient cost comparison research, etc.) and sub-par procurement employee training and performance.
The total operating-related expense (employee salaries and benefits, occupancy costs, etc.) incurred by the Procurement Department divided by the dollar amount the Procurement Department has spent on purchases over the same period of time, as a percentage.
The amount of company spending (direct, indirect and service-related spending) that is managed by the Procurement Department divided by total company-wide spend over the same period of time,...
KPI Type : Quality
Formula : (Dollar Amount of Expenses Managed by Procurement / Total Company-Wide Expense) * 100
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