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PROCURE-TO-PAY
End-to-End Process Map and Measures
Delivering a product or service is a core competency for all organizations. However, organizations need to ensure they have sufficient and cost-
effective inputs to deliver the products and services their customers demand. Hence, the procure-to-pay process—the end-to-end process
focused on obtaining materials and services necessary to manufacture a product or supply a service—should allow the organization to efficiently
and effectively execute its core offering to its customers, as well as manage its cash flow and the bottom line effectively.
Procure-to-Pay: High-Level, End-to-End Process
Figure 1
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A common struggle for any end-to-end process management is
identifying the right measures that encapsulate the value of the
process. These key performance indicators (KPIs) allow the
organization to focus all participants in the end-to-end process,
Procure-to-Pay, on a shared goal that aligns with the strategic
purpose of the process.
Common End-to-End Process KPIs:
On time delivery On time payment
The following table (Figure 3) provides the median values of the
end-to-end process KPIs. In addition to KPIs that measure the
overall value created by the end-to-end process, organizations will
also monitor its performance through common productivity
measures such as cycle time. These measures allow the
organization to identify improvement opportunities and drill into
root causes for performance dips in the above KPIs.
Procure-to-Pay: Detailed Process Click Here to Enlarge
Figure 2
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Procure-to-Pay Benchmarks: Select KPIs
Measure ID Measure Name Median Sample Size
102139 Percentage of invoice line items paid on time by the business entity 88.0% 1762
102648 Percentage of supplier orders received by original request date (on time) 81.0% 2122
103094 Procure-to-pay cycle time in days 25.0 1622
105456 Average procure-to-pay cycle time in days for goods 32.9 604
105457 Average procure-to-pay cycle time in days for services 30.0 570
Figure 3, Source: Open Standards Benchmarking Portal
PHASE DEFINITIONS AND MEASURES This section of the article dives into each phase of the Procure-to-Pay process and includes definitions, phase-specific KPIs, and available measures
for the relevant KPIs.
https://www.apqc.org/benchmarking-portal
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PROCURE GOODS AND SERVICES
Definition—the procure goods and services process covers how an organization sources the raw materials and services it needs. This includes
ordering and managing the purchase orders for the materials and services as per sourcing requirements and strategy.
Procure Goods and Services Process
Figure 4
Phase-Specific KPIs:
Amount of maverick purchasing
Spend by buying channel
Average value of purchase orders
Performance measures for the phase: cost, cycle time, through put, and number of FTEs
The following table (Figure 5) provides median values for select KPIs for the procure phase.
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Procure Goods and Services Benchmarks: Select KPIs
Measure ID Measure Name Median Sample Size
102822 Percentage of total purchases procured via maverick buying 1.0% 2063
101768 Percentage of total value of goods and services purchased from top ten suppliers 60.0% 1339
102422 Percentage of purchase order line items transacted using e-procurement enabled catalogue
suppliers 30.0% 1971
102424 Percentage of purchase order line items transacted via a portal 0.0% 112
100385 Transaction amount per purchase order $7778.69 1811
100639 Cycle time in hours to place a purchase order 14.0 2263
103997 Total cost to perform the process group "procure materials and services" per $1,000 revenue $6.84 2374
104129 Number of purchase orders processed per FTE that performs the process group "procure
materials and services" 552.5 1617
104251 Number of FTEs that perform the process group "procure materials and services" per $1 billion
revenue 28.3 1826
Figure 5, Source: Open Standards Benchmarking Portal
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RECEIVE GOODS AND SERVICES
Definition—the receive goods and services process includes planning, coordination, and processing of inbound materials, products, and services.
Receive Goods and Services Process
Figure 6
Phase-Specific KPIs:
On-time delivery
Orders received complete and damage free
Quality of goods and services received
Performance measures for the phase: cycle time
The following table (Figure 6) provides median values for select KPIs of the receive phase.
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Receive Goods and Services Benchmarks: Select KPIs
Measure ID Measure Name Median Sample Size
102648 Percentage of supplier orders received by original request date (on time) 81.0% 2122
102430 Percentage of purchase orders received damage free 95.0% 1775
102428 Percentage of purchase orders received complete 90.0% 2123
102705 Percentage of total number of items purchased and received failing inspection (incoming material
quality) 0.91% 274
100322 Average supplier lead time in days on purchased materials 10.0 2098
Figure 6, Source: Open Standards Benchmarking Portal
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MANAGE INVOICES
Definition—the pay process includes processing payments of operating expenses and other supplier charges. This includes the development of
policies and procedures around processing of accounts payable and all operations.
Manage Invoices Process
Figure 7
Phase-Specific KPIs:
First time right payments
Ratio of suppliers to invoices
Touchless invoices
Payment spread by payment channel (e.g., wire, ETF, check)
Performance measures for the phase: cost, cycle-time, through put, and number of FTEs
The following table (Figure 8) provides median values for select KPIs of the pay phase.
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Manage Invoices Benchmarks: Select KPIs
Measure ID Measure Name Median Sample Size
100642 Days payable 30.0 3268
101944 Percentage of disbursements that are first time error free 94.9% 1602
104604 Percentage of disbursements submitted electronically 82.0% 1247
100575 Cycle time in days from receipt of invoice until payment is transmitted 15.0 1588
100632 Cycle time in days to resolve an invoice error 4.0 1665
103831 Total cost to perform the process "process accounts payable (AP)" per $1,000 revenue $0.68 1640
101290 Number of invoices processed per FTE that performs the process "process accounts payable (AP)" 9,463.6 2064
101108 Number of FTEs that perform the process "process accounts payable (AP)" per $1 billion revenue 6.9 3101
Figure 8, Source: Open Standards Benchmarking Portal
ABOUT APQC
APQC helps organizations work smarter, faster, and with greater confidence. It is the world’s foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management. APQC’s unique structure as a member-based nonprofit makes it a differentiator in the marketplace. APQC partners with more than 500 member organizations worldwide in all industries. With more than 40 years of experience, APQC remains the world’s leader in transforming organizations. Visit us at www.apqc.org, and learn how you can make best practices your practices.
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