Work out cost per purchase order instantly with clear inputs, formula shown and shareable results.
Cost per purchase order isolates the transactional share of the procurement budget and divides it by order volume. Expressing it as a percentage of average order value shows immediately whether small orders are economically worth raising at all.
Transactional cost
Transactional = Annual operating cost x Share of effort on transactional work %
Cost per order
Per order = Transactional cost / Purchase orders raised
Manual processes run 3,000-8,000 per order; well-automated catalogue and punch-out ordering can be under 500.
Because it sets the threshold below which an order costs more to raise than it saves, which is the case for automating or using procurement cards.