Procurement Cost Analysis
Category: Analytical
Measures the total costs associated with procuring goods and services from suppliers.
What it Measures ?
Compares actual procurement spend vs budgeted spend.
Relevant StakeHolders
Procurement Controller, Finance Head
Why it Matters ?
Reduces procurement inefficiencies.
In-depth Use Case / Real-world Example
A company manufacturing machinery calculates Procurement Cost Analysis by evaluating the total procurement costs, including supplier pricing, shipping, handling, and administrative expenses. For example, if the company spends ₹15 crore on procurement in a year, it assesses the costs relative to the value of the goods sourced to identify potential savings or inefficiencies.
Sample Formula
Actual Procurement Costs / Planned Procurement Costs