Value of direct materials and services purchased as a percentage of cost of goods sold
This measure calculates the value of direct materials and services—the items and activities used to directly produce a product—as a percentage of cost of goods sold (COGS). Direct materials/services include raw materials and any activities required to convert raw materials to finished goods. COGS represents the purchase price of items/services sold, including indirect overhead such as freight, inspecting, and warehouse costs. As part of a set of Supplemental Information measures, this measure helps companies evaluate additional variables not covered elsewhere for the "procure materials and services" process.
Benchmark Data
- Median
- 75th
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Indicator:
Compute this Measure
Units for this measure are percent.
(Value of all direct materials and services purchased / Cost of goods sold (COGS)) * 100
Key Terms
Cost of Goods Sold (COGS)
Cost of goods sold (COGS) is the amount on an income statement that represents the cost of purchasing raw materials and manufacturing finished products. This represents specific or direct manufacturing cost of material and labor entering in the production of finished goods. For merchandise companies, cost of goods sold represents the purchase price of items sold, as well as indirect overhead such as freight, inspecting, and warehouse costs. For service organizations, cost of goods sold may be referred to as Cost of Services.
Supplemental Information
Supplemental information is data that APQC determines is relevant to decision support for a specific process, but does not fit into the other measure categories such as cost effectiveness, cycle time, or staff productivity.