Measuring Purchasing Performance

This article discusses the main performance measures used by five different companies. In the four private‐sector companies studied, the emphasis is on finding ways to measure purchasing contribution to profitability — hence accounting measures form the basis of the main control tools, coupled with a management by objectives programme to reduce costs — whereas in the Government‐owned factory, purchasing appears to have a service function and accounting measures to control overall performance are difficult to identify. It is also pointed out that formal vendor rating schemes are not used mainly because performance in the areas of quality, delivery and service cannot be quantified in terms of the financial implications.