SUMMARY REVIEW: CROSS-INDUSTRY REPORT OF STANDARD BENCHMARKS 2012

Transcription

1 SUMMARY REVIEW: CROSS-INDUSTRY REPORT OF STANDARD BENCHMARKS 2012 July 31, 2012 The Cross-Industry Report of Standard Benchmarks, published annually by CAPS Research, contains metric data on commonly referenced benchmarks. By regularly looking at supply management data collected from different industry sectors, CAPS Research provides core metrics ranging from supply management operating expense as a percent of total spend and managed spend to the percent of spend with qualified socioeconomic program suppliers. Key to the success of this benchmarking program is CAPS Research s ability to work with different organizations within different industry sectors to collect and analyze performance data, and subsequently publish the Cross-Industry Report of Standard Benchmarks on a regular basis. The most recently published Cross-Industry Report (July 2012) is available on the CAPS Research public website ( Starting with this edition, the Cross-Industry Report will be published annually instead of semi-annually. Updates and comparative reports will be provided to CAPS Research sponsors and benchmark program sponsors on-demand. Industry-specific breakout reports are available to CAPS Research corporate sponsors and companies who participate in (and support) the benchmarking program. The decision to publish the Cross-Industry Report annually will likely result in a larger number of participants across the different industry sectors. Reporting annually will also provide additional opportunities for CAPS Research to develop detailed comparative reports. If you are a regular subscriber or participant you will notice some key changes to the overall metric report this year: a. The industry sectors are on the horizontal plane with represented data in columns, and the benchmarks (1 through 20) are represented on the vertical plane. The Average of Averages data is found in the last column on the right side of the report. b. Two new benchmarks provide information on the percent of supply management employees that are strategic employees (benchmarks 4 and 5), and operational employees (benchmarks 6 and 7). Note that benchmarks 5 and 7 report the percent of companies who reported increases or decreases in strategic and operational employees, respectively. CAPS Research cannot report the actual numbers of increased/decreased employees because of the varying survey population. c. Two benchmarks that were published in the December 2011 report have been removed: professional training hours per supply management employee (formerly benchmark 12), and supply management group retention (formerly benchmark 13). All rights reserved.

2 The 2012 edition of the Cross-Industry Report of Standard Benchmarks includes data provided by 153 different organizations representing 12 different industry sectors. Survey participants who could not be assigned to a unique industry sector are included in Other Industries. Industry breakout reports for each of the industry sectors measured have been provided to CAPS Research corporate sponsors and are published on Knowledge Central ( our sponsor-only website. The industry breakout reports will not be published on the CAPS Research public website ( Below is a review of the Cross-Industry benchmarks published in 2010, 2011, and No. Cross-Industry Benchmark Average of Averages Supply Management Spend as a Percent of Sales/Revenue 47.14% 46.83% 46.61% 2 Percent of Spend Managed/ Controlled by Supply Management 83.39% 81.45% 82.16% 3 Supply Management as a Percent of Company 1.76% 1.80% 1.57% 4 Percent of Supply Management that are Strategic 41.08% 38.07% 38.21% Percent of Companies Reporting an Increase in Strategic Supply Management 32.29% 5 Percent of Companies Reporting a Decrease in Strategic Supply Management 22.65% 6 Percent of Supply Management that are Operational 58.88% 61.92% 61.71% Percent of Companies Reporting an Increase in Operational Supply Management 31.80% 7 Percent of Companies Reporting a Decrease in Operational Supply Management 26.24% 8 Supply Management Operating Expense as a Percent of Spend 0.95% 0.96% 0.86% 9 Supply Management Operating Expense per Supply Management Employee $129,660 $123,371 $119, Supply Management Spend per Supply Management Employee ($ Million) $22.76 $21.12 $ Managed Spend per Supply Management Employee ($ Million) $16.98 $15.55 $ Percent of Total Spend via pcards 1.49% 1.16% 1.39% 13 Training costs per Supply Management (FTE) Employee $912 $778 $ Cost Reduction Savings as a Percent of Managed Spend 2.51% 2.33% 3.40% 15 Cost Avoidance Savings as a Percent of Managed Spend 2.79% 1.96% 1.99% 16 Average Purchase Order Processing Cost $396 $429 $ Average Cycle-Time (days) from Requisition Approval to P.O. Placement (Direct) Average Cycle-Time (days) from Requisition Approval to P.O. Placement (Indirect) Percent of Active Suppliers Accounting for 80 Percent of Supply Management 6.18% 6.14% 6.85% Spend 20 Socioeconomic Program Spend as a Percent of U.S. (only) Spend 13.61% 11.03% 10.23% For more information about CAPS Research and our unique benchmarking programs, contact the benchmarking team at metrics@capsresearch.org. All rights reserved.

3 CAPS Research Cross-Industry Report of Standard Benchmarks July 2012 Aerospace/ Defense Chemical Manufacturing DOE/NNSA Contractors Engineering/ Construction Financial Services Industrial Manufacturing Metals/ Mining Petroleum Pharmaceuticals Semiconductor Transportation Services Utilities Other Industries Average of Averages 1 Total spend as a percent of sale/revenue dollars 48.27% 64.61% 46.72% 64.33% 17.51% 57.90% 47.99% 40.03% 63.55% 52.43% 30.09% 44.27% 35.14% 47.14% 2 Percent of total spend managed/controlled by supply management 93.27% 84.70% 99.58% 94.08% 70.31% 89.85% 79.63% 77.15% 65.43% 97.52% 77.78% 77.02% 77.78% 83.39% 3 Supply management employees as a percent of company employees 3.69% 1.29% 1.80% 3.44% 0.29% 1.93% 1.29% 3.86% 0.91% 1.07% 0.71% 2.04% 0.55% 1.76% 4 Percent of supply management employees that are strategic 23.90% 46.69% 59.38% 14.45% 60.45% 42.32% 44.00% 28.77% 58.91% 40.12% 35.06% 30.26% 49.71% 41.08% Cross-Industry Comparison of Standard Benchmarks 5 Percent of companies that reported an increase in supply management strategic employees Percent of companies that reported a decrease in supply management strategic employees 25.00% 20.00% 0.00% 50.00% 0.00% 61.54% 37.50% 43.75% 33.33% 33.33% 40.00% 35.29% 40.00% 32.29% 31.25% 60.00% 50.00% 0.00% 25.00% 7.69% 0.00% 18.75% 16.67% 33.33% 20.00% 11.76% 20.00% 22.65% 6 Percent of supply management employees that are operational 76.10% 53.31% 40.36% 85.55% 39.55% 57.68% 56.00% 71.13% 41.09% 59.88% 64.94% 69.51% 50.29% 58.88% Percent of companies that reported an increase in supply management operational employees 43.75% 40.00% 14.29% 33.33% 12.50% 38.46% 37.50% 50.00% 33.33% 33.33% 20.00% 23.53% 33.33% 31.80% 7 Percent of companies that reported a decrease in supply management operational employees 31.25% 40.00% 71.43% 16.67% 25.00% 7.69% 0.00% 18.75% 16.67% 33.33% 20.00% 47.06% 13.33% 26.24% 8 Supply management operating expense as a percent of total spend 2.34% 0.43% 2.17% 0.34% 0.98% 0.55% 0.78% 0.53% 0.78% 1.02% 0.79% 0.72% 0.95% 9 Supply management operating expense per supply management employee $117,002 $141,123 $117,649 $116,805 $109,572 $113,576 $132,590 $158,149 $185,991 $126,413 $110,957 $132,487 $123,265 $129, Total spend per supply management employee (millions) $7.19 $34.43 $6.22 $6.62 $30.75 $12.44 $37.02 $34.29 $39.42 $20.01 $23.61 $21.48 $22.40 $22.76 Managed spend per supply management employee 11 $6.46 $28.89 $6.18 $6.25 $22.98 $10.67 $26.21 $24.94 $23.14 $19.47 $12.38 $15.48 $17.49 $16.96 (millions) 12 Percent of total spend via pcards 0.67% 0.39% 4.89% 0.70% 2.83% 0.41% 0.38% 0.87% 1.02% 0.79% 1.75% 1.61% 3.09% 1.49% Annual spend on training per supply management 13 $622 $541 $768 $359 $491 $1,261 $456 $1,346 $2,613 $883 $741 $858 $912 employee 14 Cost reduction savings as a percent of managed spend 2.87% 0.94% 3.63% 1.58% 1.25% 2.99% 2.35% 4.29% 3.66% 1.95% 2.13% 2.51% 15 Cost avoidance savings as a percent of managed spend 3.16% 5.47% 2.39% 0.89% 1.72% 1.61% 3.14% 1.72% 4.99% 2.79% 16 Average purchase order processing cost $629 $253 $255 $115 $167 $852 $203 $301 $991 $356 $237 $ Average cycle time (in days) from requisition approval to PO placement for direct goods Average cycle time (in days) from requisition approval to PO placement for indirect goods and services Percent of active suppliers that account for 80% of total spend 6.68% 5.09% 9.71% 13.28% 6.97% 6.33% 5.46% 4.59% 5.03% 3.90% 2.72% 3.84% 6.75% 6.18% 20 Percent of spend with qualified socioeconomic program suppliers 24.56% 33.61% 8.48% 5.65% 9.72% 10.49% 10.66% 5.72% 13.61% Data Year: 2011 Release Date: July 31, 2012 All rights reserved

4 May 15, 2012 Cross-Industry Report of Standard Benchmarks Glossary Active Supplier: A supplier from whom you purchased goods and/or services during the reporting period. Cost avoidance: The difference between prices for goods and services and the probable increase in prices during the reporting year if actions had not been taken to obtain reduced costs for the same goods and services. Cost reduction: Realized by reducing the cost of the same goods or services purchased during the reporting period against the price paid in the previous reporting period. Direct Goods: Raw materials and components that can be identified with individual units of output. Indirect Goods and Services: Indirect goods and services that are not identified with individual units of output and do not end up in the product or service delivered to the customer. Managed and/or controlled spend: Purchases carried out following company policies and procedures that meet one of the two following conditions: Purchases made by the supply management department. Purchases made directly by end users following policies, procedures, and commercial framework set up by the supply management department. Operational employees: Supply management employees that are primarily engaged in day-to-day procurement activities that support an organization's standard procurement processes and procedures. Organization employees: Total number of all employees in the organization (corporation, company, division, group, or business unit) for which you are reporting. Training: Learning opportunities that facilitate a person s professional development and career enhancement. Purchase order: A legally binding document prepared by a purchaser to describe the terms and conditions of a purchase. Strategic employees: Supply management employees engaged in long-range sourcing and procurement activities that are critical to the organization's ability to meet its core business objectives. Copyright 2011 Institute for Supply Management and W. P. Carey School of Business at Arizona State University. All rights reserved.

5 Supply Management Operating expense: All of the supply management group s salaries and payroll-related expenses (e.g., FICA, benefits); allocated expenses (e.g., space, facilities, equipment, utilities, telecommunications, information technology, etc.); and unallocated expenses (controllable expenses incurred such as travel, training, materials, and supplies). Do not include costs allocated to the supply management group on some basis for Corporate, Segment, or Business Unit management allocations. Copyright 2011 Institute for Supply Management and W. P. Carey School of Business at Arizona State University. All rights reserved.