✔While every business wants to be successful, the various ways to evaluate success vary greatly based on size, sector, company, and even individual department. Key performance indicators (KPIs) may be employed to assist assess employee performance and identify which workers are making significant contributions to the organization's overall progress.
To learn more about these KPIs, check our blog article: [ Ссылка ].
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➡The Focus on Cost Savings
➡What are the Cost Reduction and Cost Avoidance KPIs?
➡How Prokuria Can Help
Even if a procurement organization is spending its whole year hitting quotas and exceeding standards, if they were operating on the wrong KPIs, their productive activity has, in reality, only accelerated the company's plunge into deficiency. In light of this potential outcome, procurement leaders need to establish the proper KPIs for their teams. In doing so, they will ensure that they will be getting actual business success for their organization.
The Focus on Cost Savings
The possibilities of cost savings are what distinguishes an excellent procurement agency from a poor one. Statistically speaking, effective procurement people will spend about 21% less money and employ about 29% fewer individuals than their less effective counterparts.
The ideal procurement approach will prioritize financial budget conservation. There are several cost-cutting strategies, as well as some cost reduction and cost prevention KPIs that organizations must consider if they want to be successful in their procurement-saving plan.
What are the Cost Reduction and Cost Avoidance KPIs?
✔Procurement ROI
The ROI of a procurement differs from that of a normal return on investment, which is usually calculated based on the following equation: ROI = (gain from the investment - investment cost) / investment cost.
✔Price Competitiveness
This KPI focuses solely on shortlisting those vendors that provide your business with a competitive edge. In some ways, it reflects vendor performance.
✔Cost Reduction
This KPI might be tracked by comparing old and new expenditures for the good or service. By keeping a constant eye on cost reduction, you may improve your long-term efficiency.
✔Cost Avoidance
The cost avoidance KPI is concerned with the activities used to lower future costs and expenditures. This metric, in comparison to the hard savings measured through the cost-cutting KPI, takes on so-called soft savings that do not appear directly in a company's bottom line in any direct, tangible, or quantifiable way.
Learn more about Prokuria: [ Ссылка ]
About Prokuria:
Prokuria is fast to start, easy to customize, and intuitive to work with when compared with other more traditional software solutions. It is the easiest and fastest solution for automating sourcing and Supplier Relationship Management. It is simple and intuitive, yet very powerful. Buyers and suppliers require no training in using Prokuria, which leads to fast adoption by teams. Although cloud-based, it is straightforward to be customized for special necessities like audit needs, approval flows, or special user rights.
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