Why must purchasing performance be evaluated?

For checking the results and value of efforts and betterment in product.

Supplier management module of ITIL framework focuses on many important aspects of vendor management, vendor performance should be analysed on agreed SLAs, analyse and understand the competitive vendor market, maintain business integrity, reliability on vendor for organisational performance and many other custom benefits. 

Purchasing performance must be evaluated for future reference, so that the company can know how much to budget for next purchase. For proper recording. To also determine the cost of sales for their products. And to determine the quantity of their production.

In general, I personally believe that all data must be recorded for any performance as then the data could be analyzed and a hypothesis could be created. As many fellows answered the purchasing (price) or method is not a necessary measurement for the performance keeping in mind that chance and other variables might be in the equation.

Purchasing Effectiveness. The price that the purchasing department paid for an item is not necessarily a good measurement of purchasing performance. The price of an item may fluctuate due to market conditions, its availability, and other demand pressures. ... The ratio used to measure the liquidity of the inventory.

Evaluation of purchasing performance is important to capture the market.Because market is based on demographic as well as geographic location including utility ,ability to pay.Baesed on the factors test marketing is done by the manufacturer which is part of the purchasing performance of the product supplied to market.

• There are two main KPI's that must be evaluated to be able to evaluate purchasing performance
• - Cost Saving: If the purchasing department procures an item at a lower price than they did previously, then it is a cost saving.
• - Increased Quality: When an item has improved quality the result will result in cost saving also.
• When evaluated correctly, the company shall guarantee that its short and long term goals are going in the right direction with required constant savings achieved.

Every purchasing should be leading to the cost of the project and hence  should be evaluated the cost, the project managerial and organizational level and comparisation the other alternative approach

Every cost center in a project must be evaluated for cost performance purposes and establishment of its current and future effects on the project. Also it enhances organisational management understanding and comparison with other alternative approaches.