Strategic Selection of Key Performance Indicators in Procurement Processes

Procurement, a crucial element of Supply Chain Management (SCM), plays a pivotal role in a company's strategic framework, exerting substantial influence on its overall success or failure. Consequently, evaluating the efficiency and effectiveness of the procurement process becomes essential. Performance measurement serves as a means of assessing these aspects, providing managers with regular insights for informed decision-making. To deepen the understanding of the significance of measuring procurement performance, researchers have developed a framework. This study introduces key performance indicators (KPIs) specifically designed to gauge procurement performance. The procurement process involves planning, execution, and performance monitoring. The identification of KPIs is based on an extensive review of literature and expert interviews spanning various industries. Through the Analytical Hierarchy Process, weights are assigned to these KPIs to determine their importance in measuring procurement performance. The research findings reveal a total of 41 KPIs, categorized into 8 for procurement planning, 25 for procurement execution, and 8 for performance monitoring. These KPIs collectively provide a comprehensive toolkit for assessing and improving the efficiency of the procurement process.