Successful procurement doesn't start with more metrics, but with the right transparency. Which KPIs reveal where the real potential lies.
Many companies know exactly how much they are buying. They know their material costs, contract volumes, and supplier prices. But as soon as the question arises as to how efficiently their own procurement is actually working, things get more difficult.
Which processes cause unnecessary effort? Where do hidden costs arise? Which supplier structures make procurement unnecessarily complex? And what contribution does procurement actually make to the company's success?
This is exactly where procurement KPIs come into play. Metrics create transparency and reveal what often remains hidden in day-to-day business. However, the challenge is not to collect as many metrics as possible. Because more data does not automatically mean better decisions. The key is to select the right KPIs and derive concrete actions from them.
Especially with indirect spend, it becomes clear why this topic is so important. What is not visible can hardly be managed.
In many procurement organizations, the focus is traditionally on classic metrics such as savings, procurement volume, or price trends. These KPIs are important, but they only show part of the reality.
Because procurement success does not consist solely of negotiating better prices. A procurement department can achieve high savings while simultaneously causing unnecessary costs through complex processes, too many suppliers, or unclear responsibilities.
Indirect spend in particular highlights this challenge. Software licenses, services, office supplies, or smaller operational purchases originate in many areas of the company and are often managed decentrally. How much such one-off requirements can become a blind spot often only becomes apparent when you take a closer look.
This creates structures that grow over years. More and more suppliers, more and more creditors, more and more individual invoices, and more and more coordination between departments, procurement, and finance. The problem is not that individual decisions were wrong. Every additional supplier relationship or individual process usually had a justifiable reason. The challenge arises from the sum of these decisions.
That is precisely why procurement KPIs must not only measure performance but also make complexity visible.
Not every metric shows direct savings. Some KPIs reveal how manageable and efficient a procurement organization actually is.
The number of active suppliers is one of the most important metrics for companies evaluating their procurement structure. A high number of suppliers is not automatically problematic. Strategic supplier relationships, specialized providers, or regional requirements can be beneficial. However, it becomes critical when a large number of small suppliers with low purchasing volumes emerge.
Every additional supplier means additional administrative effort: master data maintenance, invoice verification, contract management, and coordination. This often creates hidden costs, especially in indirect procurement. Many small orders lead to numerous individual processes, even though the actual value of the goods is low.
The metric therefore shows not only how many suppliers a company has, but also how complex its procurement organization has become.
The maverick buying rate measures the share of expenditure that occurs outside of defined procurement processes.
A high rate does not necessarily mean that employees are deliberately breaking rules. It often indicates a structural problem: the existing processes do not match the reality of the departments. When employees need a quick solution, but the regular procurement process is too complicated or slow, workarounds are created.
This is often the case with indirect spending. Departments need flexibility, while procurement needs transparency and control. A high maverick buying rate is therefore less of a control problem and more of an indication that processes need to be better adapted to the company's requirements.
Purchasing volume is one of the fundamental metrics in procurement. It shows the financial resources being moved through external suppliers. However, the metric becomes even more meaningful when combined with the question of what proportion of this is actively managed by the procurement department.
After all, only visible expenditure can be optimized. Especially with indirect spending, a large portion often lies outside of strategic procurement. Departments sign contracts independently, use different providers, or automatically renew existing agreements.
As a result, the company loses transparency regarding its actual expenditure and potential optimization opportunities.
The biggest challenge in procurement controlling is not collecting as much data as possible. Today, companies can measure almost every activity. The crucial question is which metrics actually help in making better decisions.
An overloaded KPI system can be just as problematic as a lack of transparency. When teams work with too many metrics, they lose sight of the factors that are truly relevant. Successful procurement organizations therefore focus on a few meaningful KPIs that consider costs, processes, and strategic impact together.
Metrics alone do not change processes. However, they create the foundation for identifying problems and addressing them in a targeted manner. When companies realize that their number of suppliers is growing rapidly, invoice processes are causing high costs, or indirect spending is barely controllable, the opportunity arises to address the root causes.
This is exactly where Pedlar's single creditor model comes in. Instead of just measuring and subsequently managing increasing complexity, Pedlar reduces it at the source. Diverse supplier relationships and individual requirements are maintained, while administrative processing is bundled through a single central creditor. Why this approach works can be seen directly in the metrics.
This results in fewer interfaces, fewer invoice processes, and more transparency regarding indirect spending. The effect can also be made visible through procurement KPIs: less operational complexity, higher process quality, and a larger share of expenditure that can be managed in a structured way.
Successful procurement is not measured solely by the savings achieved. It is also determined by how efficiently and effectively the underlying organization operates. The right KPIs make it clear where potential lies and which structures are preventing companies from reaching their full potential.
Ultimately, what companies cannot see, they cannot improve. And what is unnecessarily complex is difficult to manage strategically.
This post draws on insights from the article "The most important metrics and KPIs in procurement" by Technik+Einkauf and contextualizes them from the perspective of the single creditor model. Click here for the original article.
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