What metrics should you track when forecasting procurement in Medical Sales?

1 Lead time

Lead time is the amount of time it takes from placing an order to receiving the goods or services. Lead time can vary depending on the type, quantity, and complexity of the products or services, as well as the availability, location, and reliability of the suppliers. Lead time can affect your inventory levels, cash flow, and customer satisfaction, so you need to track it regularly and factor it into your procurement forecasts. You can use historical data, supplier information, and market trends to estimate lead time and adjust your orders accordingly.

3 Supplier performance

Supplier performance is the quality and consistency of the goods or services provided by your suppliers. Supplier performance can affect your procurement forecasts by influencing your lead time, inventory levels, costs, and customer satisfaction. You need to track supplier performance to evaluate their reliability, responsiveness, and compliance with your standards and expectations. You can use metrics such as on-time delivery, defect rate, order accuracy, and service level agreements to measure and improve supplier performance.

4 Inventory turnover

Inventory turnover is the ratio of sales to inventory. Inventory turnover indicates how efficiently you are managing your inventory and how quickly you are selling your products or services. Inventory turnover can affect your procurement forecasts by reflecting your demand, profitability, and cash flow. You need to track inventory turnover to optimize your inventory levels and avoid excess stock or stockouts. You can use formulas such as cost of goods sold divided by average inventory or sales divided by average inventory to calculate inventory turnover.

5 Procurement costs

Procurement costs are the total expenses associated with acquiring goods or services from external sources. Procurement costs can include direct costs such as purchase price, shipping, taxes, and fees, as well as indirect costs such as administration, quality control, storage, and waste. Procurement costs can affect your procurement forecasts by impacting your budget, margins, and return on investment. You need to track procurement costs to control your spending and maximize your value. You can use metrics such as total cost of ownership, cost per unit, or cost savings to measure and reduce procurement costs.