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Procurement Organization


Procurement Organization


Cost of Procurement as a % of Spend ?Leader: 0.596%;
Average: 0.828%;
Laggard: 1.060%.

Calculation: Procurement cost / Total spend. Value: Tracks Procurement Efficiency. Note: Relevant Benchmarks Vary Widely by Industry.

Source: The Hackett group / CAPS / ACME

Procurement FTE per Billion of Spend ?Leader: 43.6;
Average: 51.55;
Laggard: 59.5.

Calculation: # Procurement FTEs / Total spend x 10^9. Value: Measure Focus on Highest Value Activities.

Source: The Hackett group

Procurement Return On Investment ?Leader: 9.5;
Average: 4.6;
Laggard: 2.

Calculation: Savings Implemented / Procurement cost. Value: Justifies Investment in Procurement Organization.

Source: The Hackett group

Annual Purchasing Spend ?Spend under control VERSUS Spend not addressed by the Procurement Department.


Current Annual Saving


Current Procurement Cost


Current Procurement ROI


Additional saving with x9.5 Procurement ROI (Leader)


Total working hour per year


Internal processing cost per order

Sourcing & Spend Management


Suppliers per million of spend ?                                Leader: 3.4;
Average: 10.84;
Laggard: 28.32.

Calculation: Active Suppliers / Million Spend x 10^6. Value: Measures Supplier Leverage and Collaboration Opportunities.

Source: The Hackett group

Suppliers Creation & Maintenance Cost ?Leader: 31$;
Average: 43$;
Laggard: 209$.

Calculation: 72 minutes x internal hourly cost + The average degradation of supplier data is about 2% per month. (Simetryk).

Relates to: Collect information on suppliers - Entering new suppliers - Systems integration - Approval execution - Update - Legal document collection & Financial control.

Annual % of negotiated savings ? Leader: 20%;
Average: 10%;
Laggard: 5%.

The average % ranges from 5 - 20% per Aberdeen and 10% per Hackett.

Savings from negotiation, volume discounts offered by preferred suppliers (project based).

% Spend under control (with contract) ?Leader: 85%;
Average: 59%;
Laggard: 27%.

Calculation: Spend Actively Sourced & Managed by Procurement / Total addressable spend.

Value: Measures Procurement Control and influence; Potential Savings Pipeline.

Source: The Hackett group

ABC Spend analysis ?ABC analysis is a classification method derived from the Pareto principle and split strategic / recurrent / tactical puchases.

Saving from Supplier Mng


Move from manual data collection, creation & maintenance to digital & automatic solution.

? Year 1: +15% spend coverage up to 85% spend under management.

Year 2: +25% spend coverage up to 90% spend under management.

Year 3: +35% spend coverage up to 95% spend under management.

User and supplier adoption = more spend captured and accurate spend data = real time granular item level visibility = spend savings from new contracts, re-negotiations and compliance to existing contracts/preferred suppliers.
Saving using a Source-to-Contract solution



Total saving by leveraging a Source-to-Contract solution: better Supplier control, enhance spend coverage and optimal project efficiency. (Spend analysis, e-Tender, Contract mng, Project mng.