Benchmarking in procurement is seeing renewed interest in light of the ongoing challenges and disruptions facing supply chains and suppliers. Procurement professionals are trying to figure out how well their organizations are performing and how they compare to others. Benchmarking is the competitive edge that allows organizations to adapt, grow, and thrive through change.
One of the biggest challenges in benchmarking in sourcing and procurement is vocabulary. There is no universal consensus or agreement on what to call this organizational function. Names like sourcing, contracting, strategic sourcing, acquisition, purchasing, and others are used by different organizations for the all-encompassing procurement term. APQC uses the terms procurement or sourcing and procurement to mean the all-encompassing, highest-level name for this group of related strategic and tactical processes.
4 Procurement Measures You Need to Know
- Total cost to perform the procurement process group
- This is at the process group level. Also consider costs at the lower, or process, level.
- Select an appropriate normalizing factor: per $1,000 revenue; per $1,000 purchases; per procurement FTE (full-time equivalent employee)
- Cycle time to issue a purchase order (PO)
- Issuing a PO for services tends to be faster than a PO for goods so considering measuring those cycle times separately.
- Consider the impact of technology and how improvement can free up staff.
- Percentage of purchase orders approved electronically
- Automation improves the ability to leverage volume discounts, consolidate buying, and decrease costs and errors from manual efforts
- Number of POs processed per procurement employee
- Process standardization helps ensure that the drive for speed does not result in increased errors
- Looking at the number of POs processed per FTE (full-time equivalent employee) rather than using headcount allows you to count any part-time or fractional employees performing this process.
When benchmarking in procurement, in addition to the standard categories of measures for evaluating internal performance—cost effectiveness, staff productivity, process efficiency, cycle time, and quality—it’s important to set benchmarks for measuring supplier performance. Two popular measures are: 1) average supplier lead time in days on purchased materials and 2) percentage of supplier on-time delivery.
Top Downloaded Procurement Benchmarks
For the past six months (September 2024 – February 2025), the most frequently downloaded benchmarks in procurement from APQC’s Benchmarks on Demand tell an interesting story.
Topping the list are two similar measures of staff productivity: the number of purchase orders processed and the number of purchase order line items processed – both of these are per FTE that orders materials and services. These measures include processing both manual and electronic forms of POs. And in a world of increasing automation, this measure should continue to improve over time.
Ideally, the more POs (and the more PO line items) processed per FTE placing orders, the fewer people (and therefore lower labor cost) needed to support this tactical activity. Since these measures look at and encourage faster throughput, it is important to have counterbalancing quality measures to ensure that the drive for speed does not result in increased errors.
Out of the top 10 measures, three of them are process efficiency measures looking at the numbers of FTEs in procurement. First is the number of FTEs that perform the process “manage suppliers” measured as a percentage of all FTEs in the entire procurement process group. Then comes the number of FTEs that perform the entire procurement process group per $1 billion in purchases, followed by the same FTEs per $1 billion in revenue. Different denominators can help tell different stories.
The global pandemic and resulting supply chain disruptions have highlighted the importance of procurement and supplier relationships to an organization’s success, making it vital for organizations to see how they compare in terms of allocating FTEs to managing suppliers and procurement as a whole.
Rounding out the list of most popular measures, there are four cycle time measures. Average procure-to-pay cycle time, average supplier lead time on purchased materials, the cycle time to issue a PO for services, and average cycle time to set up a supplier in the procurement system.
The first one, procure-to-pay cycle time, is an end-to-end, cross-functional measure. There is disagreement among various organizations regarding whether to strategically stretch out payments to suppliers, resulting in a longer cycle time, or pay on time or faster to take advantage of early-pay discounts. While stretching out payables is a known strategy, organizations should consider the impact that decision has on suppliers, especially smaller to mid-size suppliers during chaos. Paying them more slowly may lead them to have cash flow issues and could also permanently damage the relationship. Is it worth it?
Longer supplier lead times are important to monitor because they can cause dissatisfied customers if order fulfillment and delivery are delayed (i.e., no one wants Christmas gifts to arrive in February). Building strong supplier relationships can help address this measure.
Unlike in prior time periods, it’s interesting to note what is NOT in the top 10 most downloaded procurement measures from the past six months: cost measures. This omission likely reflects the increased focus on comparing your procurement organization’s productivity and efficiency: how many people and how productive are they? Cost measures do show up, but they are further down the list.
Here are the most popular procurement benchmarks from September 2024 – February 2025 by measure category.
- Cost-effectiveness
- Total cost to perform the process group "procure materials and services" per $1,000 revenue
- Total cost to perform the contracts management function as a percentage of revenue
- Cycle time
- Average procure-to-pay cycle time in days - including both goods and services
- Average supplier lead time in days on purchased materials
- Cycle time to issue a purchase order for services in days (including weekends)
- Cycle time to issue a purchase order for goods in days (including weekends)
- Average cycle time in days to set up a supplier in the procurement system
- Staff Productivity
- Number of purchase orders processed per FTE that performs the process "order materials and services"
- Number of purchase order line items processed per FTE that performs the process "order materials and services"
- Number of contracts managed per contracts management FTE
- Number of purchase orders processed per FTE that performs the process group "procure materials and services"
- Process Efficiency
- Number of FTEs that perform the process "manage suppliers" as a percentage of process group "procure materials and services" FTEs
- Number of FTEs that perform the process group "procure materials and services" per $1 billion purchases
- Number of FTEs that perform the process group "procure materials and services" per $1 billion revenue
- Number of FTEs that perform the process "manage suppliers" per $1 billion revenue
- Percentage of total purchases procured via maverick buying
APQC Benchmarking Process
APQC takes benchmarks very seriously, with defined and consistent processes for data capture, validation, and metric calculation. Every data point is scrutinized by an APQC analyst and goes through pre-validation, logical validation, and statistical validation. We only accept high quality, valid data into our database.
APQC’s Benchmarking Code of Conduct serves as a guide to efficient, effective, and ethical benchmarking. In this time of heightened information security precautions, APQC also has developed and publicizes our digital privacy statement.
To Learn More
The APQC Resource Library contains additional articles, case studies, data and measures, infographics, reports and white papers, and recorded webinars and slides. New content is added every month.
- On-demand webinar: Benchmarking Sourcing and Procurement and presentation slides
- Sourcing and Procurement: 2024 Blueprint for Success – This in-depth members-only report defines the process framework, highlights key performance indicators and benchmarks, and showcases recommended performance drivers for sourcing and procurement. Non-members can access the executive summary here.
- Procurement Key Benchmarks – This member-only collection contains recommended key benchmarks (measures and median values) with industry versions available.
- Procurement: Current State Practices Reports – This member-only collection contains comparative data on practices such as procurement strategy and structure, technology and automation, and supplier risk management, with industry versions available.
- Risk Management in Supply Chain: 2024 Quick Poll – This collection of research provides a snapshot of the current state of risk management in supply chain, including having systems for continuous monitoring and risk profiling, engaging with insurance providers, establishing a risk governance team, and reviewing business continuity plans.
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