What is Contract Spend Ratio in SAP SRD-SRM-ANA - SRM-Analytics?

SAP Term: Contract Spend Ratio

• Component: SRD-SRM-ANA

• Component Name: SRM-Analytics

• Description: A key performance indicator KPI that shows the percentage of the company's spend that refers to contracts within the total purchasing spend. Contract spend ratio is defined as the purchasing value based on purchasing contracts versus total purchasing value.

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• Key Concepts: 
  Contract Spend Ratio is a metric used in SAP SRM-Analytics to measure the amount of money spent on contracts compared to the total amount of money spent. It is calculated by dividing the total amount of money spent on contracts by the total amount of money spent. 
  
  How to use it: 
  Contract Spend Ratio can be used to measure the efficiency of a company’s procurement process. It can be used to identify areas where more money could be saved by negotiating better contracts or finding more cost-effective suppliers. It can also be used to compare different suppliers and determine which one is providing the best value for money. 
  
  Tips & Tricks: 
  When calculating Contract Spend Ratio, it is important to include all costs associated with a contract, such as shipping and handling fees, taxes, and any other fees that may be associated with the contract. Additionally, it is important to ensure that all contracts are included in the calculation, even those that are not currently active. 
  
  Related Information: 
  Contract Spend Ratio is closely related to other metrics such as Total Spend Analysis and Supplier Performance Analysis. These metrics can be used in conjunction with Contract Spend Ratio to gain a better understanding of a company’s procurement process and identify areas for improvement.