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The Metrics of Supply Management Glossary

Active Supplier – A supplier from whom goods and / or services were purchased during the reporting period. This would include all suppliers within sourceable spend.

Addressed Spend - The portion of Managed Spend where an action has been taken (i.e. bid, negotiated, indexed) during the current reporting period by Supply Management. It is also referred to as touched spend. Do not include spend that is part of multi-year agreements that do not require any further action to be taken beyond year one.

Buyer (Transactional Purchasing) – Supply Management employees engaged in tactical purchasing of a repetitive, administrative nature in support of the Requisition-to-Payment cycle. 

Business Relationship Manager – A role that has been created or defined with the primary responsibility for being the liaison to the business and managing the business relationship. 

Category Management – Any team member involved primarily in the process of overseeing a group of related commodities, goods, or services with the typical steps of internal spend analysis, external market analysis, development of a category strategy, and execution of that strategy (which often includes supplier management).  Sometimes referred to as commodity management.

Center-Led – The authority and responsibility for strategic level activity is with a small core group at the corporate level. This may include selected commodity management or standardized programs and processes. The execution of the plan is at the local level.

Centralized – The authority and responsibility for most Supply Management and Supply Management-related functions are assigned to a central organization. 

Cost Avoidance – Calculated when no previous agreement or year-over-year price comparison exists. The difference between price paid for goods and services and the most reasonable comparison baseline price (e.g. initial quote, lowest qualified bid, typical corporate discounted price, or market index).  Avoidance savings can also be generated by avoiding or minimizing a price increase or counting value-add savings or benefits (e.g. rebates, receiving a higher level of volume discount, even though lower volume is met, etc.).   Avoidance is calculated for the 12-month period only (“sunsets”), even when a multi-year contract exists.

Cost Reduction – The difference in price paid for goods and services during the reporting period against the price paid in the previous period for the same goods or services.  Reduction is calculated for the 12-month period only (“sunsets”), even when a multi-year contract exists.

Data Analyst – Any team member with the primary responsibility for the collection and analysis of data from a variety of sources used to help inform decisions about suppliers, commodity strategies, spend, etc.

Decentralized – The authority and responsibility for most Supply Management and Supply Management-related functions are organized at the local level. 

Direct Goods and Services – Goods and services that are commonly purchased for the production of goods and creation of services consumed by the external customer or client.

Indirect Goods and Services – Goods and services that are commonly purchased for consumption by internal stakeholders (business units or functions) rather than the external customer or client. 

Managed Spend – Purchases made following the policies, procedures, category strategies, and / or commercial framework developed by Supply Management. This also includes catalogs, PCard programs, and marketplaces that are put in place and controlled by Supply Management. 

Reporting Unit FTE – All FTEs in the reporting unit you selected. When reporting, if there is one person at 50%, and another at 75%, report 1.25 FTE. 

Robotic Process Automation (RPA) – Using software that can be easily programmed to perform routines (“robots/bots”) of high-volume, repeatable tasks that previously required human actions to complete. 

Sourceable Spend – Total spend minus items that never have the potential to be sourced by Supply Management (i.e., taxes, fees, legal judgements and / or charitable contributions).  Be sure to include those areas that could be sourced by Supply Management but currently are not (i.e. marketing, legal). If you do not normally include these areas internally, please do so for this survey. 

Strategic FTE – Supply Management workers engaged in long-range sourcing and procurement activities that are critical to meeting strategic business objectives.

Supply Management – The functional group that includes procurement, purchasing, sourcing, support roles and Supply Management activities that are strategic, tactical and operational in nature. Do not include warehousing, logistics and / or materials / inventory management.

Supply Management Operating Expense – All of Supply Management’s salaries and payroll-related expenses (e.g., FICA, benefits), allocated expenses (e.g., space, facilities, utilities, information technology, etc.), and unallocated expenses (controllable expenses incurred such as travel, training, materials, and supplies). 

Supplier Risk Team Member – Individuals responsible for managing supplier risk as their primary role. 

Systems and Technology Specialist – Individuals within the Supply Management headcount with the primary responsibility of implementing, maintaining, and / or managing procurement / Supply Management information systems, tools and technology.  

Tactical FTE – Supply Management workers executing the tasks that enable the day-to-day functioning of core purchasing and procurement processes and procedures. Such activities include transactional PO processing, vendor master maintenance, and tactical sourcing (e.g. “three bids and a buy”).

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