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Innovation, branding, and business model aside, if your company is rife with inefficiencies and led by poor decision-making, your potential for growth will become stunted. Whatever sector or industry you are in, procuring goods and services both efficiently and strategically will accelerate your success. Effective procurement analytics will save you time and money while making your organization more productive and sustainable.
If your procurement process costs you valuable time and incurs unnecessary costs, you may end up falling behind your competitors.
However, we live in a digital age where statistics, data, and deep-dive insights reign supreme, giving us the power to spot potential issues and inefficiencies within the business. Thanks to the right KPI software, it is much easier to identify trends and set goals that will ultimately increase productivity, drive growth, and boost profits.
Here, we will uncover the power of company procurement reports, consider their importance in the digital age, and look at how to make them. We will also explain the benefits and challenges that occur when dealing with procurement data to provide you with innovative ideas on spotting inefficiencies.
Let’s get started.
What Are Procurement Reports?
A procurement report allows an organization to demonstrate how its procurement activities deliver value for money, contribute to the realization of its broader goals and objectives, and provide a panoramic snapshot of the effectiveness of its procurement strategy.
By tracking the right procurement KPI, a company gains the power to enhance its strategy by preventing minor inefficiencies from becoming significant issues and providing a clear insight into the practices or supplier relationships that work, as well as those that don’t.
Throughout the years these reports have been created and managed through traditional means of data management such as spreadsheets or static presentations but companies need to hurl these stone-age practices and start utilizing modern online reporting software that will transform your results, and ultimately, increase profits. Next, we are going to see their importance more in detail, alongside with most common challenges.
Why Are Procurement Reports Important?
In a time when digital data offers a wealth of boosting insight, businesses cannot afford to shoot in the dark when it comes to their procurement strategy.
An IDC study shows that over 80% of business leaders surveyed from sales, HR, procurement, and other departments agreed that issues arise because companies are equipped with different internal systems and applications that don’t ‘talk’ to one other. Forty-three percent of the surveyed staff also said they often have to copy and paste or rekey in information, thereby wasting time and hindering productivity.
Common sourcing reports that drill down to significant areas of the procurement process have the power to help you make the kind of improvement that can make or break your business in today’s cutthroat digital climate. Data reporting is the crystal ball that offers a glimpse into the past, present, and future of a company’s procurement activities, helping it move forward in the best and most sustainable way possible.
There are a host of benefits to a well-made procurement reporting structure. Some of them include:
1. Improve the accuracy of the financial forecasting
You can easily increase financial efficiencies and save costs by identifying potential problem areas in your organization. If you track your costs on a regular basis, your purchasing department monthly reports will be filled with crucial financial analytics insights that will help you streamline your supplier management processes, identify if you need to train your staff on how to reduce costs, and ensure continuous monitoring to ensure your finances are being well managed and efficient. Financial forecasting is vital to the ongoing health of your procurement activities. Through the use of modern dashboards, you will be able to deliver your projections with pinpoint accuracy. But not only, but the use of interactive financial charts will also make your data exploration processes quicker and easier.
2. Minimize errors throughout the supply chain
By monitoring your dependency on providers over a set time frame and identifying which ones deliver the right product or service at exactly the right time, you can analyze your suppliers’ performance with ease while conducting comparisons throughout your business. With the help of a dashboard designer, you can simply drag-and-drop your values and create interactive visualizations that will point out errors immediately. That way you will be able to significantly reduce errors, and increase your productivity levels.
3. Increase the efficiency of crucial KPIs
With so many areas to consider, deciding which KPIs to focus on while defining metric measurement periods can prove to be a challenge at the initial stages. Scaling the value of analytics across all areas of your procurement process might prove difficult in the beginning, but by ensuring that all key members of your team have access to your KPI reports and understand how to leverage the data to their advantage, the steps to take towards your strategy will swiftly become clear. For example, you might want to track crucial order cycle times and order fulfillment speeds to be able to handle urgent orders and take into account providers that can fulfill your requirements quickly and without additional complexities.
4. Understand which relationships are working
If you create regular purchasing reports, you can easily identify which suppliers are not only available during your urgent times, but also classify them based on a number of other criteria such as special discounts, reaction time, and other compliance parameters of your contract. That way, you can introduce categories for each provider and identify which ones keep a good relationship with your company on the one hand, and on the other, which need termination or replacement. We will see this in our examples below in the article.
5. Take accurate measurements
Another benefit is how they provide a wealth of opportunities to improve your ROI based on your various procurement actions, initiatives, and activities. Both the short-term and long-term goals of your business will be fulfilled by offering a panoramic snapshot of every critical aspect of your procurement journey. By benchmarking your success accurately, you stand to increase your ROI while maintaining a standard of excellence that will drive you forward.
6. Reduce and avoid unnecessary costs
With procurement being such a critical component, providing the oil that greases the organizational cogs and keeps everything flowing along with monitoring and analyzing all aspects of the process is essential. From costs and delivery to compliance rates and order cycle time, there is a wealth of insights to explore.
As the company evolves and grows, scaling your common procurement efforts to reflect the new demands of the business might also prove challenging. However, by making a collaborative approach and following some dashboard best practices to remain in line with your key business goals and objectives, you’ll be able to avoid data fragmentation and continue to benefit from the insights that are the most valuable.
7. Improve responsivity and decision-making under pressure
Like in almost every business process imaginable, incidents can occur, and things can go wrong. By working with the right procurement analysis report, you can respond to potential challenges or changes ‘at the moment’ and create quick-fire solutions that will ultimately save time and money.
A cohesive mix of accurate real-time and dynamic online data visualization means that you can pinpoint the issue at a glance and make strategic decisions with complete confidence. As such, your supply chain can remain fluent at all times.
8. Gain 24/7 access to essential insights
Another stand-out benefit is the universal access to data that modern BI dashboards provide.
Modern sourcing reports are accessible across a multitude of devices, including desktops, tablets, and smartphones. Rather than relying on data when you’re in the office or at specific locations, modern procurement-based tools will empower you to access invaluable information and essential insights 24/7 regardless of where you are in the world.
As a result, you can measure your improvements, respond to potential issues, and develop strategies even when you’re on the move.
Now that you understand why a procurement report is important, we’re going to focus on the how-to and see the best practices and tips you can utilize in your own procurement operation.
"The greatest value of a picture is when it forces us to notice what we never expected to see." - John Tukey
What Should Be In A Procurement Report?
When building these kinds of reports it is important to consider a few fundamental items that should be included in order to have a successful process. Here it is important to remember that not all items need to be added into one single report, but they serve as a great starting point to build a data-driven procurement department.
- Cost control: This section is all about costs. Here you can include fiscal-year-to-date costs savings, costs incurred since last period, costs saving opportunities, as well as some potential threats related to costs that need further observation.
- Supply risks: Staying one step ahead of any issues is a great benefit from modern online data analysis. The supply risks portion will list all risks that have been identified alongside realistic solutions to mitigate the impact of each of them. This can be done with the help of advanced technologies such as predictive analytics. More on this later!
- Internal customers relations: An important aspect of a successful procuring process is the relationship with internal customers such as suppliers, shareholders, employees from other departments, among others. In this section, you can share all relevant information regarding completed collaborations with internal customers to make sure every aspect is being monitored.
- Performance checks: Every procurement department that wants to be successful in the long run need to ensure that the company is working with the best providers. That said, this item should monitor the performance of the different suppliers, list the challenges of each of them, and how they are improving in time. This is useful information as it allows you to ensure a healthy collaboration.
- Processes improvements: Besides checking providers, you should also monitor the development of the general processes in your procuring routine. Here you can track that every critical process is running smoothly as well as find improvement opportunities for extra efficiency.
- Sourcing projects: As its name suggests, this section should track all aspects related to sourcing projects. In order to make it as efficient as possible, you should separate each of these projects into stages, this way you can monitor each stage in detail and extract conclusions when needed.
- Strategic collaborations: Last but not least, an important area that can be beneficial for this kind of report is innovation and collaboration. Sometimes, companies might find themselves working with experienced suppliers that can offer innovative solutions that the business can apply to other projects or processes. For this reason, it is important to keep track of all these suggestions, and how they develop in practice and consider them in the future.
These are only a few examples of areas that you can include, of course, this will depend on the needs and goals of each organization. Let’s see this more in detail with some useful tips.
Procurement Reporting Steps & Tips
Making sure that you’re properly using your hard-earned money is crucial to becoming and staying successful in today’s cutthroat business environment. That’s why regular analysis of your processes and utilizing various types of procurement reports will ensure you’re making the best use of your resources. Let’s take a closer look at the most useful tips to conduct your analytics process and stay profitable in the long run.
1. Define your goals and needs
The first step in your process should be to define your general goals and needs. This will help you organize your resources smartly and ensure consistency. Some common procurement analytics goals include lowering costs, increasing quality, ensure good relationships with providers, among others. However, reporting can also allow you to understand what role is the department playing in achieving general company goals. For this, you can ask yourself questions such as: What is procurement’s current strategic role in the organization? How collaborative we are with internal stakeholders that serve as customers? Is the procuring department responsible for the bulk of direct and indirect spending for the organization?
By answering these key questions you can find improvement opportunities that will serve as goals for your department. But, in order to find all of this useful information you first need to take care of your data, which leads us to our second point!
2. Identify and gather all your data sources
No matter how big or small your company is, you need to gather and consolidate all your data sources – from all the departments and units, including accounts payable, E-Systems or various formats, flat files, databases, etc. Pulling information out of many different sources will create more confusion than sustainable growth. You need to include a common interface where your data will be stored and ready to extract or manipulate whenever a manager or team member needs to create a report. Maybe it sounds like this process would take a while, but using a dashboard builder will ensure your information becomes visualized with just a few clicks without the need to spend countless hours or days into the process.
3. Clean your data
After you have identified and gathered all your data, it is time to clean, categorize, and organize it. Professional tools can help you in this step so you don’t have to manually calculate or search through endless files for the right information. Remember to standardize your analysis based on the information you’re looking for. You also need to harmonize all your transactions to be able to increase visibility on all your spending processes and ensure that your procuring strategies will increase productivity. This might sound scary and daunting, but luckily, we live in a digital arena where you can utilize modern machine learning features and let the software do the hard work.
4. Group your suppliers
To ensure maximum success, it is crucial to group and connect your suppliers so that they have a clear link with each other. For example, if one of them is Coca-Cola Co., make sure you group all its companies together, such as Sprite, Fanta, or Coca-Cola zero, as they belong to the same provider. That way you will minimize any potential error during your purchasing processes and obtain the most correct information for the management of your suppliers.
5. Manage your spend data
You need to analyze and optimize your spending data from internal and external sources to be able to drive your company forward, decrease costs and improve the relationship with your suppliers, for example. This is one of the key parts of your procurement analysis since you can easily identify opportunities and improve the visibility of your spending processes. In this step, you can utilize the 5Ws: Who? What? Where? When? Why? By adding the how you can assess your expenditures and see where to allocate your resources better. Some of the questions may include:
- Who are we buying from?
- What are we buying?
- When (how often) do we buy?
- Where are the products being delivered?
- How can we compare the data with previous periods?
If you add spend forecasting that will ensure you have a clear understanding of the potential impact on profits of the procurement processes, you can obtain a birds-eye view of your whole lifecycle and decrease your costs. More on forecasting on the next point!
6. Use predictive analytics and automation
Expanding on the point above, forecasting and automation can be two invaluable tools when it comes to building efficient procurement reports. On one hand, predictive analytics techniques allow you to analyze historical and current data about spending, catalogs, providers, materials, and more, to find trends and patterns and predict future outcomes. Armed with accurate forecasts, organizations can optimize their strategies, predict future price trends, possible risks, and find innovation opportunities.
On the other hand, paired with predictive analytics, you can benefit from automation technologies. Generating reports periodically can take hours or even days. BI reporting tools such as datapine offer automation technologies that allow you to automatically generate a report with the latest data available. This way you can maximize your procurement efforts by staying always one step ahead of any new developments.
7. Analyze your findings
Whether you need to monitor and analyze specific supply chain metrics or make sure that you have negotiated the best possible contract deals, you need to conduct regular analysis of your processes. That way you can reduce the number of providers per category and negotiate better contract rates which will, in turn, reduce your costs significantly. Remember that costs savings can be only accomplished if your calculations and previous steps such as cleaning your data are done correctly. That way you can develop purchasing reports to management or send them to your colleague in a matter of minutes. Of course, we suggest using modern technology since time is money, and you need software to collect, store, analyze and monitor your data based on powerful BI features such as machine learning and smart data alerts.
8. Create a narrative
The procurement journey is a lot like a story—it has a definitive beginning, middle, and end. That said, once you’ve analyzed your data, you should use your KPIs and visualizations to create a narrative or tell a data-driven tale.
The reason data-driven storytelling is so effective is that human brains respond best to narratives. By creating a logical plot with your data, you can use your sourcing reports to make your information accessible across the board, improving internal communication while ironing out inefficiencies within the supply chain. Also, when you paint a picture that is digestible and easy to understand, you’re likely to get executive buy-in for new strategies and investments.
To help you get started, you can check our article on the subject: data storytelling examples.
9. Rely on data visualizations
Analyzing big sets of data and getting every relevant stakeholder involved in the process is not an easy task and the procurement department is not an exception. We just discussed the importance of creating a narrative with your data, but how do you make that narrative understandable, intuitive, and interesting for your audience? The answer is simple: data visualizations.
As we’ve mentioned at some point throughout this article, traditional means of reporting are static, and creating them is very time-consuming not to mention that they are complicated to understand for users with no technical knowledge. With this issue in mind, various technologies have emerged to make the process a more intuitive task. BI dashboard software such as datapine offers a set of graphs, charts, and dashboards to visualize your most relevant procurement data with just a few clicks.
Using a set of interactive visualizations to tell your data story will help you make your insights more understandable while enhancing communication between relevant users. An important note here is that not all types of data visualizations will be useful for every purpose. It is critical to follow some data visualization techniques that will help you tell your data story in the most efficient way possible.
10. Last but not least: repeat & learn
We can conclude this section with a simple notion: repeat. Whether you need to upscale your financial reporting procedures to create a more efficient procurement strategy or clean your data to know whether a supplier is worth your efforts, you need to continuously evaluate your strategies.
As mentioned, modern technology can help you in the process and update your information automatically and send it to stakeholders, colleagues, or management by setting automated schedules, and you won’t need to use spreadsheets or manual calculations ever again. A business intelligence dashboard can simplify your processes and help you create the best possible procurement management report, daily operational, or just alarm you if an anomaly occurs.
To be able to see how this is done in action, we have prepared a list of procurement reports samples that you can take a closer look at and implement in your own strategies.
"A point of view can be a dangerous luxury when substituted for insight and understanding." - Marshall McLuhan, Canadian Communications Professor
Top Procurement Report Examples
Now that we’ve looked at how to create this kind of report, explored the benefits, and studied a range of essential tips, we’re going to look at the four primary dashboards that demonstrate their boosting power in action.
1. Procurement KPIs Dashboard
Whether you deal with physical goods or digital services, procurement is of equal importance. This is because this department links the needs of an organization with its contractors and as such, plays an integral role in the competitiveness of any business.
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That said, this procurement status report template offers a comprehensive overview of the various metrics that are vital to the success of the department. This intuitive and interactive dashboard helps in summarizing a procurement department’s main activities as well as its relationship with the company’s suppliers. In turn, the dashboard not only helps with the smooth and successful management of the department but also assists in building brand awareness.
This dashboard will enable you to pinpoint and track metrics that are found in most procurement departments, alongside details and the possibility to drill down, interact, and filter each part of the visualization. Moreover, you can easily export or set up automated reporting for each week or month, for example, to have this dashboard delivered into your inbox with fresh and updated data. With the help of online business intelligence software, procurement has never been easier to manage.
- Compliance rate: In procurement, compliance represents the basic agreements set by a company and its supplier. By breaking down each supplier into definitive categories, this particular KPI provides a clear-cut snapshot of how compliant your various partners are and if any changes should be necessary.
- The number of suppliers: This KPI tracks the level of dependency you have towards your suppliers over a particular time frame. Relying on too few suppliers and failing to diversify your sources can cultivate a significant risk of dependency. On the contrary, too many can reduce the possibility of valuable discounts. This priceless metric will help you decide on the optimum number of providers for your organization.
- Purchase order cycle time: The order cycle time is a metric that measures the end-to-end ordering process, from the time a purchase order is raised to the order approval, receipt, invoice, and payment. By reducing this time and ironing out any inefficiency, you will not only improve your productivity rate but also help to enhance your brand’s reputation.
2. Supplier Delivery Dashboard
This procurement report template is based on a supplier’s ability to provide your business with the right products and services at the right time.
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With a mix of metrics and KPIs based on elements such as defect rates and delivery times, all geared towards offering valuable information on the performance of single suppliers as well as overall, this is one dashboard that your business definitely needs. Distributors are one of the crucial parts of the procurement strategy, and you have to measure each part of your relationship and contract such as the defect rate, suppliers’ availability, load time, etc. Let’s take a closer look at these invaluable KPIs.
- Availability: This KPI measures your suppliers’ capacity and ability to respond to urgent demand consistently. In an age where consumer purchasing habits are constantly changing in response to the growing number of buying channels, it’s never been more critical to ensure that your distributors are available to cope with fluctuating volumes of orders and requests. And this KPI will help you do just that.
- Defect rate: In our fast-paced digital age, there’s little time for error, and consistent defects can prove to be detrimental to the reputation of a brand. This invaluable procurement KPI measures the quality of your individual suppliers concerning quality and service and product and helps you nip potential issues in the bud before they prove harmful to yourself, your partners, and your customers.
- Lead time: The lead time assists in quantifying the total time it takes to fulfill an order. The concept of this insight is to reduce the lead time as much as you possibly can while maintaining an exceptional level of quality.
3. Procurement Costs Dashboard
The third of our procurement report examples drills down to the costs and purchases associated with your various procurement activities.
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To successfully optimize these costs, anticipate the needs of the various business units across the organization, and ultimately save valuable time, it’s vital to oversee the entire purchasing area in one central place. This example offers a panoramic snapshot of all valuable cost-based information. As mentioned, one of the main goals of a successful procuring process is the ability to effectively manage costs. If you obtain a high-quality level of your cost management processes by tracking KPIs such as cost reduction, avoidance, and ROI, you can reap endless rewards. Let’s see these main KPIs in more detail.
- Cost of purchase order: This metric helps to monitor and control the internal costs incurred by every purchase the business makes, thereby theoretically representing the average cost of processing an order, from purchase creation to invoice closure. These costs come with an incredible level of variation, so it’s important to look at them carefully and decide on the average cost of a purchase order based on the length of time it takes.
- Cost reduction: One of the most central components of the Procurement cost report, this KPI helps to streamline tangible monetary savings across all procurement activities and processes, boosting an organization’s economic efficiency in a significant way.
- Cost avoidance: By offering a view of your various contractors and their activities in association with your business, you’ll be able to understand the areas of inefficiency that are incurring the business unnecessary costs and develop a strategy to avoid them in the future. These are what are referred to as ‘soft savings’ because they don’t go directly to the bottom line. Despite this, these savings are nonetheless invaluable.
- Procurement ROI: The ROI helps to determine the profitability of investments made within your procurement department. To calculate your Procurement ROI, you must divide the annual cost savings by the internal yearly cost of procurement, and express it as a ratio. Doing so will help you gain maximum value from your investments, and by measuring these metrics along with other key indicators, you will see significant improvements in a relatively small space of time.
4. Procurement Quality Dashboard
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Last but not least is our quality dashboard. An effective procurement cost-saving template, this most dynamic of dashboards drills down into the end-to-end quality of the procurement process or supply chain.
For a procurement process to remain robust and resilient, maintaining quality is essential. By analyzing specific metrics, it's possible to streamline your relationships with suppliers while creating better contracts and maximizing your business value in the process. Armed with a cohesive mix of quality as well as budgetary-based metrics, this cutting-edge, cost-saving template will help you drill down into specific pockets of your strategy, ensuring key elements of your supply chain are working at optimal efficiency.
With a logical and visually digestible design, this robust purchasing report sample offers swift access to key metrics centered around top suppliers, supplier cost and rejection rates trends, spend under management, and more.
Every KPI and metric included within this dashboard will tell you all you need to know to optimize the quality of your procurement processes – and we’re going to explore them in more detail now.
- Quality rating: A KPI based on monitoring as well as benchmarking the performance of your supplier relationships, both present, and future, the quality rating will help you troubleshoot issues in your supply chain head-on while evaluating the value of your contractor's relationships with pinpoint accuracy. If you notice lags or specific issues, you can take corrective measures while making supplier changes if necessary.
- Vendor rejection rate & costs: This purchasing department monthly report will help you analyze your quality management strategies with diligence and confidence. Your vendor costs and rejection rates are pivotal to the ongoing growth of your business. By monitoring this metric regularly, it’s possible to nip costly issues in the bud while formulating strategic initiatives that will ensure the ongoing health of your procurement processes.
- Emergency purchase ratio: This purchasing report template metric will give you the tools you need to track your emergency purchases over a particular time frame. By doing so, you can tackle potential financial discrepancies and organizational bottlenecks that will stunt the growth of your business. The aim here is to keep your ratios low to drive sustainable growth across the business.
- Purchases in time & budget: This metric will empower you to drill down into specific costs according to the procurement category. Here, you will gain an accurate snapshot of where your budget and spending are going to drive your procurement initiatives. By tracking these metrics stringently, you will be able to take valuable measures that will keep you on time and budget on a long-term basis.
- Spend under management: This KPI is incredibly valuable for tracking as well as optimizing your top-level expenditures. It’s presented in a logical line-style chart, and you can remain on track in terms of your budget while spotting trends based on key fiscal elements of the procurement process, such as underutilized savings. This is a powerful metric for improving and maintaining financial health on a consistent basis.
Types Of Procurement Reports
Now that we’ve covered a few visual examples, we will go through some common types of procurement reports that are used within organizations.
- Spend: As its name suggests, the spend report helps to monitor budgeting and the overall financial performance of the procurement department. They can be used to compare actual spending to approved budgets in real-time and spot any inefficiencies before they become bigger. Some of the common questions answered with spend analysis include: what are we buying? who are we buying it from? how often do we buy? when did we buy it? among others. Like this, businesses can decrease costs and increase efficiency.
- Supplier base: It helps to track every relevant detail related to individual supplier development. It usually contains detailed information that allows users to assess risks, sustainability, costs, inventory usage, as well as compare the developments of different suppliers and extract relevant conclusions that can lead the company forward.
- Accounts payable: The accounts payable (AP) allows you to streamline your supply chain by finding ways to cut costs and still maintain quality across the board. If the procurement process is generating more spending than it is supposed to it can lead to inefficiencies and a waste of time and resources. To avoid all of this from happening, AP allows for the optimization of cash flow management minimizing risks, and finding innovation opportunities that will set the business apart from its competitors.
- Category analysis: This type uses category management techniques to group data from materials, goods, and services into categories for opportunity identification. This allows for the identification of supplier trends over time and improvement opportunities in category performance.
- Contract management: As its name suggests, this type of procurement report sample covers different aspects of contract management. It provides guidance and pertinent information regarding contracts, compliance, and also opportunities for potential partnerships with suppliers that can benefit the company. It also covers aspects such as payment terms and expiration dates to ensure every contract is running smoothly.
- Savings lifecycle analysis: In simple words, the savings lifecycle is used to evaluate the effectiveness of cost-saving actions over time. Companies use it to assess the impact that the different saving initiatives have on the financial bottom-line of the procurement process.
Start Creating Your Reports!
It doesn’t matter what niche or industry you specialize in – without utilizing data to make better decisions, uncover essential insights, and develop narratives that create a real organizational impact, you will fall behind your competitors. Procurement is a delicate and vital aspect of almost every modern business. In the Age of Information, there are no excuses for shooting in the dark.
When it comes to procurement, there is little margin for error. By sweating your data the right way, you will not only keep your initiatives on track but also respond to sudden changes and formulate strategies that will ultimately accelerate the success of the business as a whole.
In summary, procurement analysis is essential to the success and evolution of your business. By using this range of innovative insights to your advantage, you will earn the level of commercial success that will push you ahead of the pack. With the assistance of a cutting-edge procurement dashboard, you will harness your data in ways you never thought possible.