Key Procurement Benchmarks at a Glance

Consumer Products/Packaged Goods Industry

Prepared using data from APQCs Open Standards Benchmarking in procurement, this table highlights procurement benchmarks for organizations in the consumer products/packaged goods industry. 1 Procurement process definitions are provided at the conclusion of the article.

Process and Measure

Overall procurement process group Number of FTEs 3 for the procurement process group per $1 billion purchases Total cost to perform the procurement process group as a percentage of revenue Total cost to perform the procurement process group per $1,000 purchases Total cost to perform the procurement process group per $1,000 revenue Total cost to perform the procurement process group per process group FTE Total cost to perform the procurement process group per purchase order Develop sourcing strategies Number of FTEs that perform the process develop sourcing strategies per $1 billion purchases Select suppliers and develop/maintain contracts Number of FTEs that perform the process select suppliers and develop/maintain contracts per $1 billion purchases

Median 2 Metric Value

40 29 26 29 25 20

70.7 FTEs 0.2% $7.01 $2.19 $101,408 $97.09

43

8.8 FTEs

42

12.9 FTEs

1 2 3

As defined by the North American Industry Classification System (NAICS) The value above and below which an equal number of responses fall Full-time equivalent employees

Page 1 of 3 Research provided by APQC, the international resource for benchmarks and best practices K03944 2012 APQC. ALL RIGHTS RESERVED

Process and Measure

Order materials and services Average supplier lead time on purchased materials Cycle time to place a purchase order in hours Number of FTEs that perform the process order materials and services per $1 billion purchases Number of purchase order line items processed per order materials and services FTE Number of purchase orders processed per order materials and services FTE Number of purchase orders processed per procurement process group FTE Percentage of purchase orders approved electronically Total cost to perform the process order materials and services per $1,000 purchases Appraise and develop suppliers Number of FTEs that perform the process appraise and develop suppliers per $1 billion purchases

Median Metric Value

43 46 43 40 36 32 43 34

6.0 days 4.0 hours 39.2 FTEs 9,488 line items 1,702 purchase orders 1,013 purchase orders 80.0% $4.86

40

7.0 FTEs

PROCUREMENT PROCESS DEFINITIONS

Develop sourcing strategies Developing sourcing strategies, also known as supplier portfolio strategies, is comprised of multiple activities, including clarifying purchasing requirements, matching needs to supplier capabilities, analyzing the spend profile to identify high-opportunity categories, matching the most effective sourcing strategy by category, seeking opportunities to improve efficiency and value, and collaborating with suppliers to identify sourcing strategies. The process may include the development of a timeline that incorporates sourcing milestones for each category of sourced product or service.

Page 2 of 3 Research provided by APQC, the international resource for benchmarks and best practices K03944 2012 APQC. ALL RIGHTS RESERVED

Select suppliers and develop/maintain contracts The process to select suppliers and develop/maintain contracts involves identifying categories of purchase, identifying suppliers, matching suppliers by category, certifying and validating suppliers, and negotiating and managing contracts. Order materials and services "Order materials and services" is the process of planning, ordering, and executing the physical delivery of materials and services from suppliers to the points of need and use. This can include processing and reviewing requisitions, approving requisitions, soliciting and tracking vendor quotes, creating and distributing purchase orders, expediting orders and satisfying inquiries, recording the receipt of goods, and researching and resolving exceptions. Appraise and develop suppliers Appraising and developing suppliers is the process of developing and managing programs and policies for interacting with suppliers and measuring and improving their performance. This can include monitoring and managing supplier information, analyzing spending and vendor performance, supporting inventory and production processes, and creating and implementing supplier training and certification programs.

For more information on these measures and metrics, see Deliver Products and Services Definitions and Key Measures in APQCs Knowledge Base.

ABOUT APQC
APQC is a member-based nonprofit and one of the leading proponents of benchmarking and best practice business research. Working with more than 500 organizations worldwide in all industries, APQC focuses on providing organizations with the information they need to work smarter, faster, and with confidence. Every day we uncover the processes and practices that push organizations from good to great. Visit us at www.apqc.org and learn how you can make best practices your practices.

Page 3 of 3 Research provided by APQC, the international resource for benchmarks and best practices K03944 2012 APQC. ALL RIGHTS RESERVED