The Procurement Glossary » Key Performance Indicator (KPI)

Key Performance Indicator (KPI)

Spend & Analytics

Also known as: KPI

Definition

A metric chosen to track progress toward a specific objective.

Explanation

KPIs translate goals into measurable targets. Good KPIs are few, aligned to strategy, and actionable. In procurement they appear in scorecards, SLAs and dashboards to steer both internal teams and suppliers.

Example

On-time delivery is the supplier's headline KPI, targeted at 98%.

Related terms

• Procurement KPI — A quantified measure of procurement performance, such as savings, cycle time, compliance or supplier OTIF.
• Supplier Scorecard — A structured summary rating a supplier across key metrics to track and compare performance over time.
• Service Level Agreement (SLA) — A contractual commitment defining the level of service a supplier must deliver, with measurable targets and consequences for missing them.
• Benchmarking — Comparing prices, costs or performance against internal history, peers or the market to judge competitiveness.

Frequently Asked Questions

What is Key Performance Indicator (KPI)?

A metric chosen to track progress toward a specific objective. KPIs translate goals into measurable targets. Good KPIs are few, aligned to strategy, and actionable. In procurement they appear in scorecards, SLAs and dashboards to steer both internal teams and suppliers.

Can you give an example of Key Performance Indicator (KPI)?

On-time delivery is the supplier's headline KPI, targeted at 98%.

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