Purchase Order Cycle Time
Average days from purchase requisition approval to purchase order issuance
What is Purchase Order Cycle Time?
Purchase order cycle time is the average number of days from an approved purchase request to a purchase order being issued. It shows how quickly the buying process moves.
Slow ordering delays projects and production and frustrates internal customers.
How this KPI is measured
- Function
- Operations & Supply Chain
- Sub-function
- Procurement
- Industry
- All Industries
- Type
- Lagging
- Impact
- Efficiency
- Unit
- days
- Measurement frequency
- Monthly
- Formula
- Sum of days from PR approval to PO issue / Number of POs raised
How to calculate it
Add up the days from purchase request approval to purchase order issue and divide by the number of purchase orders raised.
For example, if 200 orders took a combined 600 days, the average cycle time is 3 days.
Split by category and value, since complex or high-value purchases take longer.
Where it is used
Improving purchasing speed
Cut delays.
Finding bottlenecks
See where requests wait.
Improving internal service
Support the business.
How to improve it
Tips and common mistakes
- Quicker is not always better for complex purchases.
- Watch for orders raised after the goods have arrived.
- Use with compliance measures.
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