Last Update: July 2025
Reducing unnecessary spending, ensuring compliance, and accelerating procurement cycles are great goals, but how can you know you're achieving them if you're not measuring progress?
Simply stating your objectives is not enough. You need to be able to track results so you can measure your progress and determine which procurement areas can be improved even further. By tracking and reporting on procurement KPIs (Key Performance Indicators), you’ll have the data you need to inform and optimize your procurement strategy.
This blog breaks down the 8 procurement KPIs that high-performing teams rely on and how to track them.
If you’re still tracking KPIs in an Excel sheet or a legacy ERP module, you’re likely missing opportunities to course-correct spending before it becomes a problem.
Manual tracking means:
Automated tracking through a procurement platform gives you:
Bottom line: Automating KPI tracking helps finance teams be aligned and stay in control.
By leveraging analytics to track the following KPIs, you will be able to clearly see whether your procurement process and systems are delivering value as planned. That way, if the numbers leave something to be desired, you’ll know what to focus on next.
The more cost savings you can achieve, the more strategic your procurement function becomes in the eyes of leadership. But savings don’t just mean finding a lower price. They require full visibility into what you’re buying, from whom, and how frequently.
What to track:
Cost savings shouldn’t be tracked in isolation. Combine them with other KPIs like procurement ROI or vendor consolidation to show the full impact.
Negotiating better prices on goods is important, but real cost reduction comes from improving how your team works. But the procurement KPI you may not be looking at hard enough is efficiency improvements to reduce the cost of labor associated with procurement.
What can you track? Price reductions from supplier negotiations or bulk discounts, time saved through automation or digital approvals, reduced headcount or need for additional hires due to efficiency gains, and fewer duplicated purchases caused by manual processes.
Are you sourcing better supplies, equipment, and services? If so, you’re avoiding a lot of unnecessary expenditures, which correlate to your cost avoidance KPIs.
Cost avoidance is a crucial procurement KPI that reflects the savings you create by making smarter decisions upfront, even if they don’t immediately show up in the budget.
Example:
Say you’re shopping for high-output laser printers for the office. Look beyond the average per-page cost and weigh the total cost of ownership over time. Use a collaborative approach to communicate with your team on the true cost. Also, make sure to include average maintenance, provided warranty length and coverage, as well as reviews and known issues.
Then, work with multiple vendors to ensure you can get the best price per unit and per replacement toner cartridge while ensuring you have the right printer for your team.
It might come at a higher upfront cost, but procurement KPIs can measure your potential savings over time, and show that you’re avoiding the higher long-term ownership costs of a lesser quality discount printer.
How many of your employees have “gone rogue” before, purchasing something without going through the proper approval channels?
Probably more than you think. A Procurement Insight report shows that around 16% of companies express high maverick spending is one of the most pressing procurement pain points.
In order to optimize your procurement efforts, you need to drastically reduce, if not eliminate altogether, rogue spending. By one estimate, a 5 to 10 percent reduction in maverick spending can translate into millions of dollars of cost savings at large organizations, making it an essential procurement KPI to track.
Too many suppliers can mean too little control. If your total spend is spread across dozens, or even hundreds, of vendors, you’re likely missing out on cost savings and relationship leverage.
This KPI provides organizations with a number of benefits:
Quick question for you, are your company’s procurement investments worthwhile in the first place?
Procurement ROI measures the return you’re getting on every dollar spent managing purchasing activities. It helps justify investments in software, personnel, and process improvements. It also proves your team isn’t just a cost center, but a value driver.
What to track:
This procurement KPI enables you to demonstrate very clearly that your initiatives are adding value to your business. Highlight tangible savings and labor efficiencies that directly contribute to the company’s goals.
Purchase order cycle times are an essential KPI for every business to track. It demonstrates your organization’s operational efficiency and how your procurement efforts compare to that of the competition.
According to a study from APQC’s Open Standards Benchmarking, best-in-class organizations take only five hours (about one-half of a business day), to send a PO to a supplier. Companies on the other end of the spectrum can take as long as 15 hours, almost two full business days.
The quicker you’re able to place a purchase order, the more effective and agile your company will be.
Negotiating better prices and service level agreements (SLAs) is only half the job. Making sure vendors stick to them is where the savings (and trust) really show up.
Contract compliance tracks how often vendors meet the terms you've agreed on, from pricing to service levels and delivery timelines. When compliance slips, so does value, and your procurement strategy takes the hit. And the closer to 100 percent compliance, the better.
What to track:
Non-compliance can quietly erode savings and cause friction with internal teams. When you hold vendors accountable and monitor contract adherence, you protect margins and build more reliable supplier relationships.
Tracking the right procurement KPIs proves your efforts are delivering results, and helps justify your organization’s procurement investments.
Worried that staying on top of these KPIs is too much work? It doesn’t have to be. With a procurement solution like Fraxion in your tool belt, processes are easily automated, and you get the visibility and analytics you need to manage spend without second-guessing every purchase.
If you want clearer insights into your procurement performance, book a demo with the Fraxion team.
Procurement KPIs (key performance indicators) are metrics used to evaluate the effectiveness of a company’s purchasing activities. They help finance teams identify areas for cost savings, track vendor performance, and improve compliance. Without KPIs, it’s nearly impossible to make data-backed decisions or show the ROI of procurement efforts.
Start with KPIs that tie directly to business impact: cost savings, procurement ROI, maverick spend, and contract compliance. These provide a clear picture of where money is going and how procurement is contributing to financial health and operational efficiency.
Automating KPI tracking with procurement software like Fraxion eliminates the need for spreadsheets and manual calculations. With real-time dashboards, budget visibility, and automated workflows, you can track performance, flag issues early, and make informed decisions faster.
Fraxion’s spend management platform comes with built-in analytics dashboards that track spend by vendor, project, category, or funding source. It also enforces real-time budget checks and policy controls that improve KPI performance automatically. It helps reduce rogue spend, shorten purchase order cycle times, and improve audit readiness.