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Unlocking Procurement Success: The Importance of Identifying and Tracking Key KPI’s

oboloo Articles

Unlocking Procurement Success: The Importance of Identifying and Tracking Key KPI’s

Unlocking Procurement Success: The Importance of Identifying and Tracking Key KPI’s

Procurement is a crucial function for any business that wants to thrive in today’s highly competitive market. From sourcing the right suppliers to negotiating contracts and managing vendor relationships, procurement plays a vital role in ensuring that businesses get what they need at the best possible price. However, how do you know if your procurement strategy is working? This is where key performance indicators (KPIs) come into play. In this blog post, we will explore the importance of identifying and tracking KPIs for procurement success and provide actionable tips on how to do so effectively. So sit back, grab a coffee, and let’s dive into the world of procurement KPIs!

What is procurement?

Procurement is the process of acquiring goods and services from suppliers to meet the needs of an organization. It involves identifying what is needed, selecting a supplier, negotiating contracts, and managing relationships with vendors.

Procurement can encompass a wide range of activities that vary depending on the industry, company size, and organizational structure. For example, procurement for a manufacturing business will differ significantly from procurement for a retail business.

Effective procurement requires careful planning and execution to ensure that businesses get value for their money while minimizing risks associated with supply chain disruptions or quality issues.

In recent years, technology has played an increasingly important role in streamlining procurement processes by automating tasks such as vendor selection, contract management, and payment processing. This has allowed organizations to focus more on strategic sourcing rather than administrative tasks.

Procurement is critical for any organization looking to achieve its operational goals while maintaining cost-effectiveness in today’s ever-changing market environment.

What are KPIs?

Key Performance Indicators (KPIs) are measurable values that enable an organization to track and evaluate the success of its activities. These indicators can be used across various departments within a company, including procurement.

In procurement, KPIs help measure the effectiveness of processes and identify areas for improvement. They provide insight into how well key objectives are being met, such as reducing costs or improving supplier performance.

Examples of common procurement KPIs include cost savings achieved through negotiations with suppliers, on-time delivery rates from vendors, and overall spend under management. By tracking these metrics over time, companies can gauge their progress towards achieving their goals.

It’s important to note that KPIs should be specific and relevant to each organization’s unique business needs. A one-size-fits-all approach won’t work when it comes to identifying and measuring KPIs in procurement or any other department.

Utilizing KPIs in procurement is essential for organizations looking to optimize their operations and achieve long-term success.

The importance of KPIs in procurement

In any organization, procurement plays a vital role in ensuring the smooth operation of the business. However, measuring success or identifying areas for improvement can be challenging without key performance indicators (KPIs). That’s why KPIs are important in procurement.

Firstly, KPIs provide businesses with measurable data that they can use to track their progress and identify areas for improvement. This allows them to make informed decisions based on accurate information. With this knowledge, businesses can take proactive steps towards improving procurement processes and achieving better outcomes.

Secondly, having clearly defined KPIs helps teams stay aligned on what matters most when it comes to procurement. By setting specific goals and targets that everyone is working towards, teams have a common understanding of what needs to be achieved and how success will be measured.

Thirdly, KPIs help organizations prioritize resources more effectively. When priorities are well-defined and understood by all team members involved in the procurement process, it becomes easier to allocate resources appropriately – whether it’s time or money – which ultimately leads to better results.

In summary, having clear and measurable KPIs is crucial for successful procurement operations within any organization. They not only provide valuable insights into performance but also ensure that all team members involved are working towards common goals while prioritizing resources effectively.

How to identify and track key KPIs

Identifying and tracking key KPIs is crucial for procurement success. But how do you go about it? Here are some steps to follow:

1. Identify your goals: Before identifying KPIs, you need to know what your goals are. These could include reducing costs, improving supplier performance or increasing efficiency.

2. Determine the metrics: Once you have identified your goals, determine which metrics will help measure progress towards those goals. This could include cost savings percentage, on-time delivery rate or lead time reduction.

3. Collaborate with stakeholders: Get input from stakeholders such as suppliers and internal departments to ensure that the selected KPIs align with their needs as well.

4. Choose a system for tracking: Decide on a system for collecting data on the selected KPIs – this could be manual or automated depending on your budget and resources.

5. Regularly review and adjust: It’s important to regularly review the effectiveness of the chosen KPIs and make adjustments as necessary based on changing business requirements or feedback from stakeholders.

By following these steps, you can identify and track key KPIs that align with your procurement goals and enable continuous improvement over time.


Identifying and tracking key performance indicators (KPIs) is essential for successful procurement. By monitoring KPIs such as supplier performance, cost savings, and delivery times, procurement teams can make informed decisions that have a significant impact on the overall success of their organization.

To ensure effective tracking of KPIs, it’s important to establish clear goals and metrics from the outset. Regular reporting and analysis should also be conducted to identify areas where improvements can be made.

By implementing a robust system for identifying and tracking key KPIs in procurement processes, organizations can streamline operations, reduce costs, improve supply chain efficiency and ultimately achieve greater success.

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