Inventory Management
Procurement
Method Pay
Analytics & Reporting
Procurement KPIs are what a dental support organization should use to track purchasing performance, cost control, and supplier reliability across every location.
These ten carry the most weight, and we’ll dig into what each one means and how to account for them.
As the old Peter Drucker quote goes, “what gets measured gets managed.” Without a way to measure performance, a procurement strategy runs on guesswork. KPIs give finance and operations leaders an objective read on whether spend is controlled, suppliers are reliable, and savings targets are within reach.
The 10 below cover the purchasing behaviors that move a DSO's bottom line. You do not need all of them at once. Pick the ones tied to your current priorities, and add others as those stabilize.
This KPI counts how many suppliers you placed at least one order with during a period. It measures supplier concentration risk, or how dependent you are on any single source.
For a DSO, leaning on too few suppliers raises stockout exposure and weakens your position at the negotiating table, which matters most during high demand or supply chain disruption. Spreading orders across too many suppliers fragments your volume and gives up the buying power that comes with scale. Competitive quoting, where two or three suppliers actively bid for a category, tends to produce better pricing than concentrating volume with one source.
There is no universal target. Track the count by category and pair it with cost savings and supplier performance to decide how many sources each category needs.
Method shows active supplier counts by category in its dashboard analytics. Because the platform is vendor-agnostic and takes no supplier kickbacks, those comparisons reflect your real options rather than steered ones.
Order frequency is the number of purchase orders a location places in a month. It reveals purchasing habits and how disciplined your ordering workflow is.
Every order carries a labor cost, from placing and tracking it to receiving, putting away, and paying the invoice. Across dozens of locations, frequent small orders multiply that cost and rack up small-order fees and extra shipping. Batching orders reduces handling, cuts those fees, and opens larger price breaks. If you already ask each office to order on a set interval, this KPI shows who is following it.
A common target is one to two orders per location per month, set to your own policy. Frequency that runs high usually points to a missing or unenforced ordering process.
In Method, you can see POs placed by week or month and watch which way the trend is moving.
Invoice accuracy is the share of supplier invoices that match the purchase order and the receipt without a discrepancy. Calculate it as (clean invoices ÷ total invoices) × 100.
Billing errors are more common than many teams expect, and at DSO volume, they compound into real overpayment. The three-way match process validates every invoice against the purchase order and the delivery receipt before payment, catching pricing errors, quantity mismatches, goods received in error, back orders, and damaged items. A low accuracy rate tells you which suppliers to hold accountable. A rate that looks too clean tells you to check whether your detection process actually works.
Method runs three-way line-item matching and flags discrepancies before you issue payment.
Purchase order accuracy measures how often your POs capture the right supplier, items, quantities, price, and timing. Calculate it as (POs without discrepancy ÷ total POs) × 100.
PO accuracy matters for two reasons. The purchase order is the legally binding foundation of the procure-to-pay process, and it is the document that the three-way match checks against. Accurate POs mean you order from the right supplier, receive the items and quantities you intended, take delivery on time, pay the agreed price, and hold suppliers to your terms.
A platform that automates the request, approval, and order steps cuts the manual entry that drives most PO errors. Method lets you load standard terms and manage supplier-specific details such as payment terms, so every PO goes out correctly.
Primary formulary compliance is the share of spend that flows through your approved catalog. Calculate it as (on-formulary spend ÷ total spend) × 100.
A formulary narrows the products your locations buy, which makes purchasing and inventory simpler and lowers both operating and supply costs. For a DSO consolidating buying power across locations, compliance is what makes negotiated pricing real. When buyers stay on formulary, you can commit volume with confidence and direct future purchases to the supplier you awarded. Off-formulary buying quietly erodes the pricing you negotiated.
Group Dentistry Now's 2024 DSO procurement survey found DSOs commonly report formulary compliance in the 80 to 90 percent range at best, with off-formulary requests cited as a recurring pain point.
Method supports unlimited formularies and gives buyers visual indicators throughout the platform showing which items are on a formulary catalog.
Secondary formulary utilization tracks how often buyers reach beyond the primary catalog. Calculate it as (secondary formulary spend ÷ total formulary spend) × 100.
A second formulary gives clinical flexibility for specific doctor preferences while still limiting SKU sprawl and protecting your spend. Not every practice or DSO needs one. If you run a second formulary, this KPI shows how often it gets used and which offices lean on it too heavily. Setting a cap, such as no more than 30 percent of formulary purchases, gives you a target and flags locations to guide back toward the primary catalog.
Method's supply catalog tool lets you build the primary and secondary formularies and surfaces on-formulary indicators as buyers shop.
Supplier returns by location track how often and how much each location sends back to suppliers. Returns tie up cash, consume staff time to process credits, and can trigger stockouts if the supplier cannot replace stock before you run short.
Returns stem from inaccurate or redundant ordering, supplier quality, or delivery problems. Breaking the count out by location tells you whether the issue is internal, such as over-ordering, or external, such as a problem supplier. The occasional return is normal. A pattern is worth investigating, and pairing it with a vendor rejection rate helps isolate which suppliers are at fault.
Method's digital process reduces redundant orders and the manual errors that lead to returns.
Returns tell you what went wrong after delivery. Supplier on-time delivery rate tells you which suppliers create stockout risk in the first place.
Calculate it as (orders delivered on time and in full ÷ total orders) × 100. For a multi-location DSO, a chronically late supplier forces emergency reorders at higher prices and disrupts chair time, so on-time delivery belongs right next to returns in any supplier scorecard.
Cost savings compares what you used to pay against what you pay now. Calculate it as ((baseline cost − current cost) ÷ baseline cost) × 100, broken out by supplier and category.
Procurement's core job is to protect margin, so savings is the KPI leadership watches most closely. Every dollar saved in procurement is worth an estimated three to four dollars in production value, which is why finance pays attention to it. Breaking savings down by supplier and category shows which negotiations and strategies worked and where opportunity remains, which guides your longer-term cost reduction plan.
Method tracks savings over time in the analytics dashboard and supports customizable reports that drill into item and supplier detail.
Cost savings shows movement. Supply spend as a percentage of collections shows whether your absolute spend is healthy. The common benchmark is 4 to 6 percent of collections. A DSO running consistently above 6 percent likely has a controllable spend problem, no matter how much it has saved year over year. Reporting this single number gives finance leaders and PE backers a guardrail that grounds every other procurement KPI in business performance.
Purchase order cycle time is the average time it takes a PO to move from requisition to invoice payment, measured in hours or days.
Shorter cycles cut handling cost and lower the risk of running short on supplies. Measuring cycle time by supplier lets you sort sources into fast, medium, and slow, so you know who to trust with an urgent order. If you run an approval process, this KPI also surfaces approvers who slow things down and put you at risk of a stockout.
Method's approval workflow uses in-system notifications and email reminders to keep approvals moving and hold cycle time down.
Spend under management, often shortened to SUM, is the share of total spend that flows through your defined procurement process. Calculate it as (strategically managed spend ÷ total spend) × 100. The remainder is maverick or rogue spend, off-policy purchases made on the fly by whoever placed the order.
Savings only stick when you can direct future purchases, and SUM measures how much of your spend you actually control. For a DSO, rolling locations onto shared processes and suppliers takes time, but consolidating that spend is where the savings get locked in. Reading SUM by location shows where value is leaking and which offices are buying off-policy.
Gartner research cited by Zycus puts spend under management above 90 percent for best-in-class organizations.
Method monitors policy adherence by location and lets you set supplier rules, restricting buyers to approved suppliers or blocking ones you want to avoid.
It’s very possible your team doesn’t need all 10. It’s dependent on the size of your organization. Tracking more than you can act on dilutes focus.
Start with the two or three KPIs tied to your current priority, whether that is cost control, supplier risk, or formulary discipline, and add others as those stabilize. The goal is a short scorecard your team actually reviews, not a dashboard nobody opens.
Method's spend management platform brings these metrics into one place, giving finance and operations leaders the measurements they need to stay on track. Ready to see it on your own data? Contact us for a personalized demo.
Cost savings, spend under management, and formulary compliance tend to carry the most weight for multi-location dental groups, because they govern negotiated pricing and stop savings from leaking across locations. Supplier and accuracy metrics support them by protecting reliability and catching overpayment.
Operational metrics such as order frequency and purchase order cycle time suit a monthly review. Strategic metrics such as cost savings and spend under management fit a quarterly cadence tied to supplier negotiations and budget cycles.
A common target is 4 to 6 percent of collections. A practice or DSO running above 6 percent usually has room to tighten purchasing through better formulary discipline and competitive quoting.
Spend under management measures how much of your purchasing follows your procurement process. Cost savings measures the dollars that process produces. High spend under management is what makes consistent cost savings possible, so the two are read together.
Start with two or three tied to your current priority and expand from there. A focused scorecard your team reviews beats a wide dashboard that goes unread.
