Each chapter begins with an introduction, presenting the key findings.

Section 1: Demographics

We provide a description of the demographics of the chapter’s survey sample. These include organization-size demographics, including organization revenue, SG&A spending levels, number of employees, and revenue per employee.

We continue with procurement demographics, including total procurement staff member head count and total purchase orders per year.

Section 2: Procurement Staffing Metrics

This section provides typical staffing levels for the procurement function. This includes internal staff, which includes contingency workers, and external staff, which includes procurement personnel in global capability centers (GCCs) or shared services centers, outsourcing service provider personnel serving the procurement function, or residing in other departments. These levels are described using the following metrics:

• Corporate Employees per Procurement Staff Member
• Corporate Employees per Indirect Procurement Staff Member
• Corporate Employees per Direct Procurement Staff Member
• Internal and External Procurement Staff as a Percentage of Total Procurement Staff
• Percentage of Total Procurement Staff Allocated to Direct and Indirect Procurement
• Direct Procurement Staff Allocated to Internal and External Personnel
• Indirect Procurement Staff Allocated to Internal and External Personnel
• Contingency Workers as Percentage of Internal Indirect Procurement Staff
• Indirect Procurement Staff by Type of Procurement: Materials, Services, Facilities/Equipment/Tools
• Indirect Procurement Staff by Job Function: Buyers, Category Managers, CPO and Administrative Staff, Technology Staff, Data Analysts, Procurement Operations, and Contract Managers

Section 3: Indirect Procurement Function Budget Metrics

This section looks at the annual budget for the indirect procurement function. In other words, we examine how much organizations spend to operate their indirect procurement operations. The section comprises the following metrics:

• Indirect Procurement Function Budget as a Percentage of Revenue
• Indirect Procurement Function Budget as a Percentage of SG&A
• Indirect Procurement Budget per PO
• Indirect Procurement Budget by Line Item: Internal and External Personnel, Technology, Outside Services, Other
• Indirect Procurement Budget per Indirect Procurement FTE
• Internal Procurement Personnel Budget per Internal Procurement FTE
• External Procurement Personnel Budget per External Procurement FTE

Section 4: Indirect Procurement Spend Metrics

In this section, we provide benchmarks for indirect procurement spend, that is, how much organizations spend for indirect material and services. In this section, we include all indirect procurement spending, whether it is processed by internal or external procurement personnel. It includes the following metrics:

• Managed Indirect Spend as a Percentage of Total Indirect Spend
• Indirect PO Size
• Indirect Procurement Spend by Type: Materials, Services, Facilities/Equipment/Tools
• Indirect Procurement Spend by Category: Facility Management, Finance & Accounting Professional Services, MRO, IT and Telecom, Office Supplies, Marketing and Promotions, Legal services, Utilities/Power, Waste and Water, HR Services, Travel and Entertainment
• Annual Indirect Spend per Indirect Procurement Staff Member

Section 5: Procurement Organization Key Performance Metrics

In this section, we provide benchmarks to evaluate the key performance metrics of the procurement function, with a focus on indirect procurement. These are:

• Indirect Purchase Orders per Indirect Procurement Staff Member
• Managed Indirect Spend per Indirect Procurement Staff Member
• Percentage of Indirect POs per year Processed by Internal and External Procurement Personnel
• Days Payable Outstanding (DPO)
• Indirect Spend per Day

Section 6: Procurement Technology Trends

This section provides an overview of procurement technology implemented to support the procurement processes of an organization. It covers the following:

• Top 10 Procurement Systems
• Percentage of Procurement Personnel (Direct and Indirect) per Procurement Tech Specialist
• Percentage of Procurement Tech Specialists by Organizational Unit: Internal, IT, Shared Services

APPENDIX

The Appendix includes common terms and definitions used in our annual survey and in this study. It also includes a detailed definition for all procurement spending categories and staffing categories. The Appendix concludes with a brief discussion on the statistics used in this study.

• Common Terms and Definitions
• Procurement Budget Categories
• How We Define Procurement Job Functions
• Statistical Notes

CHAPTER DESCRIPTIONS

Chapter 1: Executive Summary (Free Download)

This chapter provides an overview of the key findings from the full study and describes the contents of the subsequent chapters. It also includes information on the study participants and the survey methodology.

• Introduction
• Key Findings
• Overview of the Study Contents

Chapter 2: Composite Metrics

This chapter provides composite metrics for all of the organizations surveyed, across all industry sectors and organization sizes. The 157 organizations in this sample range from $300 million to over $85 billion in annual revenue.

Chapter 3A and 3B: Benchmarks by Organization Size

In these chapters, we provide a complete set of benchmarks for organizations within the specified size classification. Benchmarks for midsize and large organizations are in Chapter 3A and for very large organizations in Chapter 3B. There are 84 respondents in the midsize and large organization sample and 73 in the very large organizations sample. We define the size categories as follows:

• Midsize and large organizations have annual revenue of more than $500 million up to $5 billion.
• Very large organizations have annual revenue of $5 billion and above.

Chapter 4: Banking and Finance Sector Benchmarks

Chapter 4 provides comprehensive benchmarks for procurement staffing and spending within the banking and financial services sector. This sector encompasses a wide array of organizations, including commercial banks, investment banks, credit unions, mortgage lenders, consumer finance lenders, and other financial services providers. The 27 respondents from this sector vary in size, ranging from companies with annual sales of approximately $500 million to those exceeding $25 billion.

Chapter 5: Energy and Utilities Sector Benchmarks

Chapter 5 offers an in-depth analysis of procurement staffing and spending within the energy and utilities sector. This sector is characterized by a diverse range of organizations, including power generation companies, electric and gas utilities, water and sewage companies, and renewable energy providers. The survey sample includes 25 respondents from this sector, with annual revenues as low as $500 million to those exceeding $30 billion.

Chapter 6: Healthcare Payor Sector Benchmarks

Chapter 6 provides a detailed analysis of the healthcare payor sector, focusing on benchmarks for procurement staffing and spending. The sector includes a range of organizations such as health insurance companies, managed care organizations, government programs, and other entities that manage healthcare costs. The chapter examines data from 22 respondents, revealing a substantial variation in company sizes, with annual sales ranging from approximately $600 million to over $60 billion.

Chapter 7: Healthcare Provider Sector Benchmarks

Chapter 7 provides comprehensive benchmarks for procurement staffing and spending within the healthcare provider industry. This sector includes a diverse array of organizations, such as hospitals, healthcare networks, clinics, long-term care facilities, outpatient care centers, and other healthcare service providers. The 26 respondents from this sector vary significantly in size, with annual revenues ranging from approximately $500 million to over $12 billion.

Chapter 8: Life Sciences Sector Benchmarks

Chapter 8 offers a comprehensive examination of the life sciences sector, presenting benchmarks for procurement staffing and spending that reflect the industry’s unique characteristics. The sector includes a diverse array of organizations, such as biotechnology firms, pharmaceutical companies, medical device companies, and research institutions. The 24 survey respondents vary in size, with organizations reporting annual revenues ranging from approximately $500 million to over $25 billion, highlighting the sector’s broad economic impact.

Chapter 9: Discrete Manufacturing Sector Benchmarks

Chapter 9 provides comprehensive benchmarks for procurement staffing and spending within the discrete manufacturing industry. This sector encompasses a wide array of organizations, including automotive manufacturers, aerospace and defense companies, electronics producers, machinery manufacturers, and other producers of distinct products. The 15 respondents from this sector vary in size, ranging from companies with annual sales of approximately $500 million to those exceeding $90 billion.

Chapter 10: Process Manufacturing Sector Benchmarks

Chapter 10 provides comprehensive benchmarks for procurement staffing and spending within the process manufacturing industry. This sector encompasses a wide array of organizations, including chemical producers, food and beverage manufacturers, pharmaceutical companies, and oil and gas refineries. The 18 respondents from this sector vary in size, with annual sales ranging from approximately $500 million to over $30 billion.

PROCUREMENT BENCHMARKING

Avasant Research not only publishes business process metrics. We also provide custom benchmarking services for clients.

Looking for expert assistance in evaluating your procurement budgets, staffing, and key performance metrics? Our custom benchmarking consulting service provides an in-depth assessment of your procurement key metrics against our database of peer organizations.