The Procurement Glossary » Process Cost per Order
Process Cost per Order
Procure-to-Pay
Definition
The internal administrative cost of processing a single purchase order, covering staff time, systems and overhead.
Explanation
Manual P2P can cost tens of ringgit per order in handling alone; automation and catalogs slash this. Tracking process cost justifies investment in e-procurement and highlights low-value, high-effort tail spend.
Example
Automation drops the process cost per order from RM90 to RM15, saving more than the software costs.
Related terms
- Cycle Time — The total time taken to complete a defined process, such as procure-to-pay or requisition-to-order.
- Tail Spend — The large number of low-value transactions and suppliers that together make up a small share of total spend but a big share of effort.
- E-Procurement — The use of web-based systems to manage purchasing activities electronically, from requisition to payment.
- Procurement KPI — A quantified measure of procurement performance, such as savings, cycle time, compliance or supplier OTIF.
Frequently Asked Questions
What is Process Cost per Order?
The internal administrative cost of processing a single purchase order, covering staff time, systems and overhead. Manual P2P can cost tens of ringgit per order in handling alone; automation and catalogs slash this. Tracking process cost justifies investment in e-procurement and highlights low-value, high-effort tail spend.
Can you give an example of Process Cost per Order?
Automation drops the process cost per order from RM90 to RM15, saving more than the software costs.
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