Free guide: KPIs
Procurement KPIs with formulas, worked values and what each one cannot tell you
A KPI is only useful if everyone calculates it the same way and knows what it cannot show. Below are the 29 KPIs from the Starter Kit's dictionary. 18 can be calculated from a spend file and are shown with their value on the kit's fictional dataset (150 invoices, 20 invented suppliers, NGN 552,660,500). The other 11 need extra data, and saying so is part of doing the job well.
KPIs you can calculate from a spend file
| KPI and the question it answers | How to calculate | Sample value |
|---|---|---|
| Total spend How much did we spend in scope and period? | Sum of invoice amounts | NGN 552,660,500 |
| Category spend share Where does the money go? | Category spend / Total spend | Professional Services 44.09% |
| Supplier count How many suppliers did we pay? | Distinct suppliers invoiced | 20 |
| Top 10 supplier share How concentrated is our spend? | Spend with the 10 largest suppliers / Total spend | 87.99% (NGN 486,310,500) |
| Supplier HHI Is dependency rising over time? | Sum of squared supplier shares in percent | 1,231 |
| High-concentration category count Which categories rely on one supplier? | Categories where one supplier holds over 80% of in-period spend / Categories at the stated level | L1: 2 of 6; L2: 20 of 20 |
| Supplier tail share How much spend sits with very small suppliers? | Spend with suppliers under NGN 1,000,000 in the period / Total spend | 1 supplier, NGN 754,000, 0.14% |
| Transaction tail How many small invoices do we process? | Invoices under NGN 1,000,000: count and value / Total spend for the share | 96 invoices, NGN 18,810,500, 3.40% |
| Average and median invoice value What does a typical purchase look like? | Total spend; middle invoice value / Invoice count | Mean NGN 3,684,403.33; median NGN 312,500 |
| Duplicate supplier count Is spend fragmented across duplicate records? | Supplier records judged to be the same entity | 0 |
| PO compliance rate (spend) How much money passes through a PO? | Spend with a PO reference / Total spend | 82.03% |
| PO compliance rate (count) How often do people follow the PO process? | Invoices with a PO reference / Invoice count | 70.00% (105 of 150) |
| Contract coverage How much addressable spend is under a contract? | Contracted spend / Addressable spend (all spend on the sample) | 62.06% |
| Off-contract (maverick) spend rate How much spend went to suppliers without a contract? | Spend flagged not contracted (N flag, counted directly) / Total spend | 37.94% (NGN 209,663,500) |
| Control matrix Which controls failed, and together or apart? | Spend in each PO by contract box / Total spend | PO+contract 53.41%; PO no contract 28.62%; contract no PO 8.65%; neither 9.31% |
| Control review population How much spend is outside at least one control? | Spend with no PO, or no contract, or both / Total spend | 84 invoices, NGN 257,488,500, 46.59% |
| Payment terms (spend-weighted) On what terms have we agreed to pay? | Sum of terms x amount / Total spend | 28.99 days |
| Short-terms spend share How much do we pay within 7 days? | Spend on terms of 7 days or less / Total spend | 25.96% (NGN 143,491,000) |
Three rules that stop KPIs misleading people
- Name the weighting. PO compliance is 82.03% by spend and 70.00% by invoice count on the same data. Say which one is on the slide.
- Never add overlapping exceptions. Non-PO and off-contract spend overlap. Use the PO by contract matrix: the review population here is 46.59%, not the 55.91% you get by adding. See the controls guide.
- Use the median for "typical". The mean invoice is NGN 3,684,403; the median is NGN 312,500.
KPIs a spend file cannot measure
These matter, but they need another data source. Reporting them from spend data alone means guessing. Say what is needed instead.
- Spend under management: A procurement-involvement field per transaction
- Emergency purchase rate: Emergency flag with a defined qualifying rule
- On-time payment rate: Due dates and payment dates, including unpaid overdue items
- Validated savings rate: Agreed baseline method, actual volumes, Finance sign-off
- Cost avoidance: An approved counterfactual (index, quote or budget)
- Price variance against contract: Contract rates and comparable units (the sample's unit prices are random)
- Sourcing cycle time: Start and end events, pauses, open cases
- Supplier OTIF: Promised and received quantities and dates
- Requisition-to-receipt issue rate: Issue records with a defined grain
- Spend per employee: Matched-period headcount and scope
- Forecast versus actual spend: A versioned forecast fixed before the period
Keep it on one page. The free KPI cheat sheet puts 14 core KPIs, their formulas and the common mistake for each on a single printable page.
Go further
The Starter Kit teaches this method end to end on the practice dataset: a 54-page guide, a click-by-click Excel and Power BI build guide, 29 exercises and 3 case studies with worked answers, 28 AI prompts, a self-checking workbook and a 29-KPI dictionary.
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Free one-page KPI cheat sheet: download the PDF, no email needed.