Overhead cost to perform the process group "procure materials and services" as a percentage of total process group cost
This measure calculates the percentage of the total cost to perform the procurement process group that comes from overhead cost. This process group includes the business activities of procurement planning, purchasing, sourcing, and inventory management. Further functions include sourcing strategies, selecting suppliers, and developing contracts, ordering materials and services, and appraising and developing suppliers. Overhead costs refer to those that an organization cannot identify as direct costs of performing a process; these include occupancy, facilities, utilities, and maintenance, etc. This measure is part of a set of Cost Effectiveness measures that help companies understand all cost expenditures related to the process "procure materials and services."
Benchmark Data
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Compute this Measure
Units for this measure are percent.
Percentage of total procurement cost allocated to overhead cost
Key Terms
Overhead Cost
For the purpose of this study, provide the total actual overhead costs for the year related to the specified process. These are costs that cannot be identified as a direct cost of providing a product or a service. Include the primary allocated costs such as occupancy, facilities, utilities, maintenance costs, and other major costs allocated to the consuming departments. Exclude systems costs that are allocated, since these will be captured separately as systems cost.
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.