Purchasing Performance KPI (Key Performance Indicators)

A

aiax74

#1
Not sure I am in the right section. However here is my question.
I am in charge with other components of the team in suggesting purchasing KPI's for an automotive components producer.
I am trying to understand how other companies measure Purchasing.
I guess there will be logistic and quality indicators (that we are now discussing with corresponding functions within the organisation), however when it comes to economics I am in difficulty.
Some ideas:
- % savings versus last year average prices
- % savings versus budget price (i.e. for raw material driven purchases)
- % of savings versus project target price
- cost avoidance versus budgeted investment cost
....
Is there any literature on the subject? How do your companies do?
Thanks in advance
 
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M

mallen92705

#2
Re: Purchasing performance KPI

Moving away from your KPI's based soley on price... I would monitro On-Time Delivery and Product Conformity.
 
A

aiax74

#3
Re: Purchasing performance KPI

Thanks for the suggestion. My post is on prices since I am "weak" in the knowledge of this area.
For Quality we are working on:
- Supplier PPM e N° of non conformities
- % PPAP's approved on first submission

For logistics:
- on time delivery + correct (quantity) delivery
- days of stock for purchased components
 

qusys

Trusted Information Resource
#4
Re: Purchasing performance KPI

Thanks for the suggestion. My post is on prices since I am "weak" in the knowledge of this area.
For Quality we are working on:
- Supplier PPM e N° of non conformities
- % PPAP's approved on first submission

For logistics:
- on time delivery + correct (quantity) delivery
- days of stock for purchased components
For logistics you could also add cost of premium freight:bigwave:
 

Mikishots

Trusted Information Resource
#5
Not sure I am in the right section. However here is my question.
I am in charge with other components of the team in suggesting purchasing KPI's for an automotive components producer.
I am trying to understand how other companies measure Purchasing.
I guess there will be logistic and quality indicators (that we are now discussing with corresponding functions within the organisation), however when it comes to economics I am in difficulty.
Some ideas:
- % savings versus last year average prices
- % savings versus budget price (i.e. for raw material driven purchases)
- % of savings versus project target price
- cost avoidance versus budgeted investment cost
....
Is there any literature on the subject? How do your companies do?
Thanks in advance
Something to keep in mind is the difference between a KPI and a simple metric.

KPIs are outcome-oriented, tied directly to an objective.
KPIs are target-based, with at least one time sensitive target value.
KPIs are rated or graded with defined thresholds that grade the gap between actuals and targets.

If you can't describe the business goal that it's monitoring, it's a simple metric, not a KPI. Go over your examples and ask yourslef "which of these measures will tell us if we are on track with the objectives in our strategy plan?". Without knowing what your business objectives are or what your strategy plan is, it's really tough to suggest.

All KPIs are metrics but not all metrics are KPIs.
 
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