Procurement ROI
Category: Strategic
Measures the return on investment for procurement activities by comparing the savings or value created against procurement costs.
What it Measures ?
Return earned from procurement efforts.
Relevant StakeHolders
CFO, Procurement Director
Why it Matters ?
Measures procurement efficiency and returns.
In-depth Use Case / Real-world Example
A company manufacturing home appliances calculates Procurement ROI by comparing the value created (such as cost savings through supplier negotiations or bulk buying) against the costs associated with procurement processes. For example, if the company saves ₹10 crore through procurement activities and spends ₹1 crore on procurement, the Procurement ROI is 1000%.
Sample Formula
Procurement Savings Achieved / Procurement Investment