How to use procurement benchmarks to improve performance

CFOs and CPOs are under sustained pressure to deliver savings, improve visibility, and build resilience, often with flat or shrinking teams. Boards expect confidence in budgets, business leaders want faster cycle times, and risk management teams are asking procurement to do more to protect continuity without slowing the business down.

Procurement benchmarks are frequently cited as a solution, but too often they live in slide decks or annual reports, disconnected from day-to-day decisions. That disconnect creates a gap between insight and impact.

When you connect procurement benchmarks to governance, policy, and purchasing behavior, they become a practical tool for improving managed spend, strengthening oversight, and aligning finance and procurement around shared outcomes. Used this way, benchmarking data supports practical, repeatable actions that drive stronger financial outcomes.

What are procurement benchmarks?

Procurement benchmarks are external reference points that compare your organization’s procurement performance against your peers, industry standards, or recognized best practices. They provide context—answering not just “How are we doing?” but “How do we compare, and where should we focus next?”

Benchmarks differ from internal procurement metrics and key performance indicators (KPIs):

• Internal metrics track performance over time within your organization (for example, year-over-year savings).

• Benchmarks consider your performance against external peers, adjusting for scale, category mix, and maturity.

Effective benchmarking typically includes:

• External comparison: Measuring performance against similar procurement organizations or industries

• Peer normalization: Adjusting procurement data so differences in size or complexity don’t skew conclusions

• Maturity modeling: Assessing not just outcomes, but the capabilities and processes behind them
  
  

Together, these elements can help you understand not only where your organization sits, but what “good” realistically looks like for your company. 

That clarity is what gives benchmarks their strategic value. When finance, procurement, and operations share a common set of performance standards, conversations shift from anecdotal debates to fact-based prioritization.

How benchmarks support financial oversight and accountability

At the board level, benchmarks provide confidence. They allow finance leaders to validate the assumptions behind budgets, cost-reduction goals, and investment cases.

When you benchmark procurement performance externally, you can more easily:

• Defend savings targets

• Ground cost-to-serve discussions in market reality

• Shift variance explanations from reactive to proactive
  
  

For CFOs, benchmarks strengthen financial oversight by linking procurement performance to enterprise-wide expectations. This connection creates clearer accountability without micromanagement and can help reveal targeted improvement opportunities.

Core procurement benchmark categories

Procurement benchmarks typically fall into a few core categories. Understanding each category—and why it matters—can help you prioritize where to act first.

Cost efficiency and spend management benchmarks

Spend management benchmarks focus on how effectively your organization controls and optimizes spend.

Common measures include:

• Addressable spend under management

• Savings as a percentage of spend

• Price variance versus market averages
  
  

Why this matters: Cost efficiency benchmarks show whether your team consistently captures savings or leaves them to chance. They also highlight how much spend remains unmanaged, which industry experts estimate can account for up to 20% of total enterprise spending. 

Unmanaged spend is often a major source of missed value. According to a report by CPO Rising, organizations can save between 6%–12% on every new dollar of spend placed under procurement’s control. These savings often come from better volume deals due to supply consolidation, better negotiation and pricing, and reduced administrative inefficiencies.

Operational efficiency and cycle time benchmarks

Operational benchmarks assess how quickly and efficiently procurement processes run. Examples include:

• Requisition-to-order cycle time

• Transaction rates through automation

• Procurement cost per transaction
  
  

Why this matters: Manual bottlenecks or inefficiencies increase internal friction and drive stakeholders to bypass procurement processes. Cycle time benchmarks help you balance control with speed, maintaining purchasing compliance without hurting productivity.

Compliance and policy adherence benchmarks

Compliance benchmarks measure how consistently purchasing follows defined policies. Typical indicators include:

• On-contract vs. off-contract spend

• Approval adherence rates

• Exception frequency
  
  

Why this matters: Policy leakage erodes negotiated savings and increases risk. Compliance benchmarks quantify how well your governance initiatives are working in practice, not just on paper.

Supplier and risk-related benchmarks

Risk-related benchmarks look beyond cost reduction to resilience and supplier management. They often include:

• Supplier concentration ratios

• Exposure to single-source or high-risk supplier relationships

• Supplier performance and reliability metrics
  
  

Why this matters: Recent disruptions have shown that the lowest cost is not always the lowest risk. Supplier benchmarks help you maintain efficiency while ensuring continuity and predictability.

Benchmarks as a lever for managed spend

Procurement benchmarks are most powerful when viewed as a tool for transformation, not a pass/fail test. The goal isn’t perfection, it’s progression.

Benchmarks should help you translate data into actionable insights. By connecting benchmark data with purchasing activity, you can move from diagnosis to execution. Amazon Business supports this with tools that link spend visibility, policy, and buying action in one place.

Identify unmanaged and fragmented spend

Benchmarks often reveal that a significant portion of spend sits outside preferred channels, contracts, or categories. This unmanaged spend (also called tail spend) is typically fragmented across suppliers, teams, or locations, making it hard to see and harder to control.

By comparing managed spend ratios to peer benchmarks, procurement professionals can:

• Quantify the scale of unmanaged spend

• Identify categories with the highest leakage

• Prioritize intervention where impact is greatest
  
  

For purchases made with Amazon Business, granular transaction-level data supports this spend analysis. Features such as Spend Visibility (a Business Prime feature) and Amazon Business Analytics help procurement teams:

• Segment spend by category, user, or location

• Identify tail spend patterns

• Benchmark internal performance against external standards
  
  

This level of spend insight turns the benchmarking process from a theoretical exercise into a practical diagnostic tool.

Set realistic performance targets based on peer data

One common benchmarking mistake is setting arbitrary targets—aims that sound ambitious but lack grounding in reality. Peer-based benchmarks enable more informed goal-setting, fueled by knowledge like:

• What top-quartile performance looks like

• How far you are from median or best-in-class peers

• Which gaps are structural versus behavioral
  
  

When you have this information, you can set targets that stretch your organization without breaking it.

Amazon Business supports leaders in ongoing monitoring through dashboards and reporting features that track progress over time. Rather than revisiting benchmarks annually, you can normalize continuous improvement and regularly assess whether changes in policy or behavior are producing meaningful results.

Use benchmarks to guide policy

Benchmarks deliver real value when they inform policy design and buying controls. For example:

• If compliance benchmarks lag behind peers, policies may be too complex or poorly embedded.

• If cycle time benchmarks underperform, approval thresholds may need adjustment.
  
  

Amazon Business helps enable procurement compliance management and policy adherence at scale through features such as:

• Guided Buying (a Business Prime feature), which steers users toward preferred products and suppliers

• Approval workflows, which align purchasing behavior with governance requirements
  
  

By embedding benchmark-driven insights into the purchasing experience, procurement leaders can streamline contract compliance without relying on enforcement alone.

Common procurement benchmark risks

Benchmarking can drive measurable improvement, but its impact depends on how it’s applied. Without proper context or governance, benchmarks can reinforce the wrong behaviors or create false confidence. Understanding the most common risks can help you use benchmarks as a decision-making tool rather than a scorecard.

Over-indexing on cost savings alone

Organizations that focus exclusively on savings often experience higher volatility and stakeholder dissatisfaction. While cost benchmarks are important, they are only one dimension of value. 

Resilience, predictability, and speed increasingly matter just as much. Balanced benchmarking ensures procurement supports broader financial stability—not just short-term reductions.

Relying on static or outdated benchmark data

Benchmark data can quickly lose relevance in volatile environments. Static, annual benchmarks may miss emerging risks or shifting spend patterns.

Continuous insight is critical. With our Spend Anomaly Monitoring feature, you can flag unusual Amazon Business purchasing behavior in near real time, enabling more dynamic benchmarking and faster corrective action.

Failing to align benchmarks across finance and procurement

Misalignment between the finance and procurement functions undermines benchmarking efforts. When each function tracks distinct key metrics or interprets benchmarks differently, decisions stall.

Successful organizations use benchmarks as a shared language, aligning savings, compliance, and risk metrics across functions. This alignment reinforces accountability and accelerates execution.

Turn benchmarks into strategic advantage

Procurement benchmarks are most valuable when they’re tied to how spend actually flows through your organization. Used well, they support stronger financial oversight, clearer accountability, and more confident decision-making across finance and procurement.

Our smart business buying solution can help you operationalize benchmark insights in day-to-day purchasing. By combining granular spend visibility for purchases made with Amazon Business, built-in policy controls, and real-time monitoring, it makes it easier to translate performance benchmarks into managed spend outcomes. Rather than relying on periodic reviews, you can continuously align buying behavior with financial and governance objectives.

Contact our sales team to see how Amazon Business can help you gain better visibility and control over your procurement performance.