Top 15 spend management KPIs to optimize procurement in 2025

Today’s business world has moved from just ‘buying’ to ‘managing spend’ strategically. Research shows that companies lose 5–15% of total spend through outdated procurement methods, whilst high performers can manage up to 85% of spend. This is where spend management KPIs are indispensable, as they provide clear visibility into spending patterns, compliance, and savings opportunities. By using KPIs to track maverick spending, contractual savings, and supplier performance, and by implementing platforms such as Procol, organizations can identify risks that need to be mitigated, avoid costs, and improve relationships with suppliers. 

What are spend management KPIs?

Spend management KPIs are quantitative KPIs that help organizations track, control, and optimize total spend. All KPIs are useful for identifying where, how, and what money is being spent on, potential savings, and whether your spending is in line with the organization’s objectives. Spend management can be defined as the proportion of total spend controlled through procurement; however, there are many other KPIs and terms to consider, such as cost savings, compliance, order cycle time, maverick spend, etc. Tracking KPIs enables better negotiations, reduces risks, and ensures the organization manages suppliers effectively.

What are the benefits of using spend management KPIs?

The use of spend management key performance indicators enables organizations to measure modern procurement outcomes, benchmark productivity, and maintain fiscal discipline. The indicators will not only reveal where money is being spent but also provide actionable steps to deliver savings, manage suppliers, and maintain compliance. Here are six advantages of implementing KPIs for spend management: 

1. Improved cost control

KPIs help organizations identify cost leakage, waste, and over-expenditures. Tracking savings recognized, maverick/outside spend, and spend under management empowers an organization to negotiate better contracts and reduce overall procurement costs.

2. Better visibility

They provide organizations with clear visibility into how budgets are allocated across categories, departments, and suppliers, while also enabling leaders to make better-informed decisions and verify that budgets are spent effectively and in line with deliverable timelines.

3. Enhanced compliance

Managing KPIs, such as supplier compliance rate and contract adherence, enables the organization to verify that employees and suppliers procure goods and services in accordance with approved procurement KPIs and policies. This enables organizations to minimize instances of maverick or off-contract spending actions and more effectively manage governance overall. 

4. Stronger supplier relationships

KPIs enable organizations to measure supplier performance against specific metrics, including delivery schedules, price stability, and service quality. The data gives organizations the information to strengthen working relationships with trusted suppliers and to respond to non-compliant or underperforming suppliers.

5. Data-driven decisions

When leaders have trusted spend analysis data, they can make decisions about procurement polices and procedures based on what is real, rather than on conceited assumptions. They will also enhance their negotiating skills, optimize their category spend, and align their purchasing practices with broader, long-term business objectives.

6. Continuous improvement

When leaders monitor and analyze spending, they can identify trends, establish performance benchmarks, and pinpoint areas for process improvements. Ongoing monitoring helps create an environment of continuous improvement within the procurement function.

Top 15 spend management KPIs to track in 2025 

Aside from monitoring costs, procurement groups now need to prepare themselves to deploy intelligent solutions so they can become obvious and in control of their procurement data. These spend management KPIs help to track savings, compliance, supplier performance, and risk while aligning with organizational objectives. Tracking these KPIs to gain visibility ultimately enables a procurement group to remain competitive and future-ready.

1. Savings

This is relatively easy and may even be obvious, so you select it first. To determine the effectiveness of your tactics, identify the year-on-year percentage of real savings. If you are comparing yourself and don’t have a year of your data, it is fine to look at monthly savings; don’t forget to consider seasonality, and particularly anything unique to your industry.

2. Cost reduction

Savings and cost reduction are not the same thing. While cost savings explore opportunities to lower product and system price points, cost reduction seeks to eliminate unnecessary costs by removing services and products. Identify current savings you made by discounting services and products, when compared to historical expenses.

3. Price avoidance

Price avoidance is an important KPI for manufacturing, trade, life science, and medical companies. This KPI determines the amount of money you saved by avoiding unintentional re-placements, repairs, or damages. Think about the amount of savings generated by proper monitoring of materials (which eliminated the disposal of old supplies), taking care of tools (which avoided expensive failure), or inventory management (which avoided excess inventory and hasty ordering).

4. Total spend under management 

Total spend under management likely refers to the portion of your company’s spending that is consistently managed by your procurement system. For total cost objectives, consider the total addressable spend and then apply it to the spend under management KPI objectives.

5. Maverick spends 

Decide on a percentage reduction of maverick spend or an appropriate amount of maverick spend. You will often want to keep your maverick spending very low. Maverick spending is the biggest risk to a good strategy for many procurement software groups since it circumvents the contract management system your group worked so hard to purchase and implement. A recent study found that over 54% of employees admit to purchasing without the required authorization.

6. Overall spending contribution

Contributing to total spending means understanding where your spending is going, whether it’s on specific items, categories, or vendors. Setting KPIs to track those contributions is important because it helps you identify savings opportunities. Two examples might be setting up a new contract management system with a high-volume vendor or funneling spending on the commodities you use a lot to a single vendor to leverage your buying power. 

7. Agreement pricing & agreement compliance

Agreement compliance is essential for the performance of the e-procurement company. Set a KPI to ensure contract management system pricing is honored on both the supplier’s and the buyer’s sides. The supplier has to offer you an agreed price, and it is just as critical for the buyers across your business to do.

8. Purchase price variance (PPV)

Set a KPI to monitor and manage price volatility. PPV is the difference between the expected costs you plan to spend and the actual price of the products when you purchase them. Volatility may arise from outdated pricing information, vendor changes, rush orders, incorrect quantity estimates, or other inaccurate projections. By reducing the PPV, you can spend more precisely and better plan your budgets.

9. Supplier administration

Supplier administration is an important area to consider, and there are many metrics you can use. You could establish a metric to monitor that a certain percentage of your spend is routed through a certain percentage of your suppliers. 

10. Supplier efficiency

Supplier performance, another vendor administration KPI, has to monitor a supplier’s reliability and consistency. This metric must include suppliers’ pricing, quality, delivery, and customer service performance.
Supplier efficiency and effectiveness may be evident in some cases, but also intermittent and difficult to identify. These procurement KPIs can help identify weaknesses in your distribution network, enabling you to find better sourcing alternatives.

11. Supplier risk score

Evaluates suppliers based on their financial stability, regulatory compliance, delivery reliability, and ESG factors. This KPI helps mitigate risks and maintain supply chain continuity. 

12. On-time payment rate 

Monitors the percentage of invoices for which suppliers receive payment within the agreed-upon timeliness. Prompt payment of invoices strengthens trust and develops a collaborative culture with suppliers, and allows the receipt of discounts when suppliers offer early-payment discounts. 

13. Total cost of ownership

Looks at more than just the purchase price, considering the cost of maintenance, the operational costs (ie, cost of use), and the disposal cost. By looking at TCO holistically, you will make better procurement decisions.

14. ROI on procurement technology

Evaluates the value and savings gained from what is spent on procurement technology solutions and platforms. High ROI indicates that digital solutions are providing value. 

15. Sustainable/green spend

Percentage of spend with suppliers you deem ethical, eco-friendly, or sustainable. This KPI measures support for ESG initiatives and improves overall brand image. 

From tracking spend under management KPIs and reducing maverick spending to increasing supplier compliance and driving spend toward sustainable procurement suppliers, providing actionable insights enables businesses to work smarter and make data-driven decisions. Procurement teams can add much more value and enhance supplier relationships by incorporating efficiency metrics with cost-saving, risk management, and sustainability metrics. Organizations that focus on these KPIs, along with spend analysis metrics, will be better positioned to stay competitive, agile, and future-ready.

Maximize your procurement KPIs’ effectiveness with Procol 

AS Procol makes the difference that tracking procurement KPIs is important for organizations looking to get the most out of spend, improve efficiency, and build supplier relationships. But to go beyond measuring KPIs, organizations should also adopt best practices for spend analysis. All you need is the right platform to analyze data, find trends, and take corrective actions quickly. Procol makes the difference.

It gives procurement teams a centralized platform to consolidate all spend data. Centralization breaks down silos and provides organizations with a single version of the truth about spend. The easy-to-use dashboards and powerful analytics let procurement leaders easily monitor KPIs, including spend analytics KPI, spend under management, maverick spend, supplier compliance, and cost savings. By leveraging automation and AI-generated insights, procurement leaders are moving away from manual reporting and towards decision-making grounded in actionable insights.

By implementing our strategies, organizations are now tracking their KPIs while improving compliance, decreasing risk, and achieving sustainable cost savings. The seamless workflows facilitate collaboration and engagement between organizations and suppliers. In 2025 and beyond, the best practice will be to maximize KPI effectiveness, adopt spend analysis best practices, and stay ahead of competitors. With us, they have the clarity, speed, and intelligence to achieve long-term procurement excellence.

Conclusion 

In 2025, organizations must monitor effectively to control costs, streamline procurement processes, and enhance supplier relationships. KPIs such as spend under management, maverick spend, supplier compliance, invoice accuracy, and sustainable spend provide organizations with actionable insights, enabling better decision-making, risk management, and mitigation. However, merely measuring KPIs will not help organizations unless they adopt spend analysis best practices with the appropriate tools. Procol offers the Ultimate Solution, providing a single platform to view spent data, evaluate in real time, improve reporting accuracy, and collaborate more effectively with suppliers. By combining disciplined KPI measurement with Procol, organizations can improve procurement performance and achieve sustainable business value.