BENCHMARKING THE NUMBER OF EMPLOYEES IN

PROCUREMENT
By Marisa Brown

Although procurement has at times been viewed narrowly in terms of only purchasing materials
and services, APQC applies a much broader, process-based view. This broader view of
procurement, which does include purchasing, is a mix of strategic as well as tactical processes.
As defined in APQC's Process Classification Framework®, the procurement process group
includes: providing sourcing governance and performing category management, developing
sourcing and category management strategies, selecting suppliers, developing and maintaining
contracts, ordering materials and services, and managing suppliers. Given the critical role
procurement plays in an organization, it’s important to keep an eye on the total number of full-
time equivalent employees (FTEs) focused on this group of processes.
As illustrated in Figure 1, data from APQC’s Open Standards Benchmarking® in procurement
shows the wide range of FTEs for the procurement process group across industries. Top
performers, e.g., organizations at the 25th percentile, have fewer than 15 FTEs in procurement
per $1 billion in revenue. By comparison, at the 75th percentile, organizations report more than
4.5 times as many procurement FTEs.

Number of FTEs that perform the process group “procure materials and services”
per $1 billion revenue

80
68.0
70

60

50

40
33.5
30

20 14.8

10

0
Top Performers Median Bottom Performers

Figure 1
N=2,335

Page 1 of 3
K009927 ©2019 APQC. ALL RIGHTS RESERVED
 An important consideration for this efficiency measure is not just the number of FTEs in
procurement, but how those FTEs are deployed (Figure 2). Tactically processing purchase orders
has been a labor-intensive process. As such, many leading organizations have turned to
technology, such as e-procurement, to increase productivity and reduce the number of FTEs
required for that process. Organizations are using e-procurement to buy both direct and indirect
materials, to leverage volume discounts, consolidate buying, and decrease labor costs.

Allocation of Full-Time Equivalent Employees by Procurement Process

Standardizing procurement processes increases performance by eliminating process overlaps

and enhances effectiveness by reducing complexities through enterprise-wide standards. Once
that occurs, e-procurement and other smart systems can automate non-value-added tasks,
allowing organizations to shift employees’ focus to more strategic processes such as developing
sourcing strategies, appraising suppliers, or developing collaborative relationships with
suppliers.

CALCULATION
This measure is calculated by dividing the number of FTEs who perform the process group
“procure materials and services” by the total business entity revenue (multiplied by *
.000000001).

To calculate FTEs involved in this process group, assume that a full-time employee represents 40
hours per week, and calculate the percentage of that employee’s time allocated to this
particular process group. For example, if an employee spends only 25 percent of his or her time
in procurement, that would equal 0.25 FTE allocated to that process group.

Page 2 of 3
K009927 ©2019 APQC. ALL RIGHTS RESERVED
 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.

Page 3 of 3
K009927 ©2019 APQC. ALL RIGHTS RESERVED