Number of items received by the business entity per procurement process group FTE

This measure calculates the number of items received by the business entity per procurement process group full-time equivalent (FTE) employee. The procurement process consists of the business functions of procurement planning, purchasing, inventory control, traffic, receiving, incoming inspection, and salvage operations. The value of this measure has a direct effect on the process "develop sourcing strategies." 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

Lock

Sorry! Not all users have access to all of our resources. Question mark icon

Want to unlock access to all of our resources?

Learn about Membership icon--arrow--right

Measure Category:
Supplemental Information
Measure Id:
105161
Total Sample Size:
1,752 All Companies
Performers:
25th
Median
75th
Key Performance
Indicator:
No

Compute this Measure

Units for this measure are items.

Back to Top

Number of items received / Number of FTEs who perform the process group "procure materials and services"

Key Terms

Back to Top

FTE - (full-time equivalent employee)

To calculate the number of full-time equivalents employed during the year for each respective process or activity, you must prorate the number of employees and the hours spent performing each process/activity. Assume that a full-time worker represents 40 hours per week. Provide the average number of full-time equivalents employed during the year for each respective process. Include full-time employees, part-time employees, and temporary workers hired during peak demand periods. Allocate only the portion of the employee's time that relates to or supports the activities identified for an applicable process. Prorate management and secretarial time by estimating the level of effort in support of each activity, by process.

For example, a part-time secretary in the finance department for XYZ, Inc. charges all of his time to finance department activities. He works 20 hours per week. The secretary splits his time evenly supporting employees working in the general accounting process and the financial reporting process. Thus, his time should be allocated by process. So, if he works throughout the year and supports these two processes, his time would be split evenly as:

20hrs/40hrs = .5FTE * 50% for general accounting = .25FTE for general accounting

20hrs/40hrs = .5FTE * 50% for financial reporting = .25FTE for financial reporting

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.

Business Entity

For survey purposes, a business entity is defined as an entity that:

  1. performs significant aspects of the processes for the surveys identified, or
  2. is part of a cost or revenue center within the company.

Within your organization, diverse departments may be geographically co-located, with closely integrated operations that form part of one "business entity" which may be a great distance apart. When trying to determine if related parts of your operation should be considered a single business entity, look for the following characteristics:

  • Do they operate closely together?
  • Do they serve many of the same customers?
  • Do they support the same region or product group?
  • Do they share any performance measures?
  • Is data meaningful at a consolidated level?

Examples of business entity definition:

  1. A general ledger accounting unit located in Germany has two groups. One performs general ledger accounting for the corporate headquarters, which has three business units. The other group does general ledger accounting for one of the three business units. In spite of their geographic co-location, their roles are substantially different and consolidating their data into a single response would make it less meaningful. Each group should be treated as a separate business entity.
  2. Three business units within a corporation use a shared services center for accounts payable and expense reimbursement, but are self-supporting for the other financial processes. The best approach is to make the shared services centre a separate business entity for accounts payable and expense reimbursement, and to retain the three original business units for the other financial processes.
  3. A global manufacturing company has five plant locations, each manufacturing product and each with its own logistics operations. For purposes of completing a manufacturing and logistics survey, they should be treated as five separate business entities.

Measure Scope

Back to Top

Cross Industry (7.2.1)

  • 4.2.1 - Provide sourcing governance and perform category management (10277) - Creating strategies for procuring materials and services from various sources, and for managing and evaluating categories. Establish a procurement process that describes the approach for obtaining products and purchasing activities. Evaluate the sources. Create sourcing relationships in order to continuously improve. Re-evaluate purchasing activities.
    • 4.2.1.1 - Develop procurement plan (10281) - Creating a plan for procuring materials and services. Plan what to buy, when, and from what sources. Include project requirements, the procurement team, the justification for the procurement, a timeline of events, and an explanation of the supplier selection process. Outline specific actions to start and complete purchases in order to adhere to best practices.
    • 4.2.1.2 - Clarify purchasing requirements (10282) - Defining the purchasing requirements for materials and services. Specify the exact inventory required for the production process. Create a specific quotation for all the sources in order to avoid any duplication or overlap.
    • 4.2.1.3 - Establish materials management contingency plans (10283) - Developing a strategy to deal with issues projected to arise during implementation of the inventory plan. Identify how to react to issues that arise and require changes to the inventory plan, such as a vendor failing to deliver materials on time. Collaborate with production and suppliers to prepare solutions to projected problems.
    • 4.2.1.4 - Match needs to supply capabilities (10284) - Synchronizing the requirements of materials and services and the capacity of suppliers for providing these materials and services. Revamp the procurement needs of the company in consideration of the capabilities of the suppliers.
    • 4.2.1.5 - Analyze organization’s spend profile (10285) - Evaluating the spend profile of the organization. Collect, cleanse, classify, and analyze the procurement data with the purpose of reducing procurement costs, improving efficiency, and monitoring compliance.
    • 4.2.1.6 - Seek opportunities to improve efficiency and value (10286) - Seeking the most efficient sourcing and procurement opportunities.
    • 4.2.1.7 - Collaborate with suppliers to identify sourcing opportunities (10287) - Collaborating with the suppliers of materials and services in order to determine new opportunities for sourcing.
  • 4.2.2 - Develop sourcing and category management strategies (20973) - Deploying a strategic sourcing methodology to segment the majority of organizational spend based on external supply markets (versus individual suppliers or internal stakeholders) to reduce the cost of buying goods and services, reduce risk in the supply chain, and maximize value delivered from the supply base. This approach typically includes cross-functional management of categories, examining the entire category spend, how the organization uses the products or services within the category, the marketplace, and major suppliers.
  • 4.2.3 - Select suppliers and develop/maintain contracts (10278) - Evaluating supplier options to select the most effective and efficient suppliers. Validate selected suppliers. Establish and manage supplier contracts.
    • 4.2.3.1 - Select suppliers (10288) - Evaluating the pros and cons of various suppliers. Choose the most appropriate and cost-effective suppliers on the basis of their material quality, delivery schedules, and costs.
    • 4.2.3.2 - Certify and validate suppliers (10289) - Validating the supply sources, and provide certification as an official supplier.
    • 4.2.3.3 - Negotiate and establish contracts (10290) - Legally binding suppliers with the company. Negotiate contracts individually with all the suppliers that include the promised material delivery, the delivery dates and duration, etc.
    • 4.2.3.4 - Manage contracts (10291) - Keeping contracts up-to-date with routine evaluation. Maintain order and discipline with the contracts in order to avoid any loss of information and mishaps.
  • 4.2.4 - Order materials and services (10279) - Creating and approving requisitions and distributing purchase orders accordingly. Hasten the procurement process to satisfy internal needs.
    • 4.2.4.1 - Process/Review requisitions (10292) - Handling operations related to processing/reviewing the requisitions. Establish and maintain procedures for the initiation, authorization, and processing of purchase requirements to procure products/services.
    • 4.2.4.2 - Approve requisitions (10293) - Approving requisitions for materials and services. Examine distributor-specific requests, and validate them individually.
    • 4.2.4.3 - Solicit/Track vendor quotes (10294) - Requesting quotes from suppliers. Use a request for quotation (RFQ) to invite suppliers into a bidding process for specific products/services.
    • 4.2.4.4 - Create/Distribute purchase orders (10295) - Creating and placing the orders for purchasing materials and services from suppliers. Analyze vendor quotes. Choose the most cost-effective vendors. Create vendor-specific orders. Distribute them in order to initiate the purchasing process.
    • 4.2.4.5 - Expedite orders and satisfy inquiries (10296) - Accelerating the purchase orders in order to fulfill the internal needs (for raw materials) depicted through inquiries.
    • 4.2.4.6 - Reconcile purchase orders (10297) - Verify that purchase orders are filled as expected: verify that items and quantities are delivered as expected, based on purchase order details and goods receipts.
    • 4.2.4.7 - Research/Resolve order exceptions (10298) - Identifying and resolving any exceptions. Address the internal needs/inquiries for materials that cannot be procured immediately. Research inquiries that require the need of exceptional materials.
  • 4.2.5 - Manage suppliers (10280) - Collecting and analyzing new information in order to track and rate suppliers through a supplier information management system.
    • 4.2.5.1 - Monitor/Manage supplier information (10299) - Examining procurement and vendor performance. Report delivery timing and the quality of the materials procured through different vendors.
    • 4.2.5.2 - Prepare/Analyze procurement and vendor performance (10300) - Assisting the production and inventory processes through the information and reports created. Use the information and metrics of the procurement and vendor performance to enhance or improve the production process.
    • 4.2.5.3 - Support inventory and production processes (10301) - Support inventory and production processes by analyzing impact of procurement decisions and collaborating to constantly improve. (For example, perhaps minimum order requirements could be negotiated to be lower, to reduce excessive inventory and make production more flexible.)
    • 4.2.5.4 - Monitor quality of product delivered (10302) - Track the performance of the suppliers on product quality. Use this information to further improve sourcing and supplier performance.