What is contract spend ratio in SAP SRD-SRM-SC - SRM-Sourcing and Contracting?

SAP Term: contract spend ratio

• Component: SRD-SRM-SC

• Component Name: SRM-Sourcing and Contracting

• Description: The purchasing volume based on contracts, compared to the total purchasing volume by purchasing organization in the current year. The values are calculated based on invoices.

Smart SAP Assistant

• Key Concepts: 
  Contract Spend Ratio is a metric used to measure the amount of money spent on contracts compared to the total amount of money spent on goods and services. It is calculated by dividing the total amount of money spent on contracts by the total amount of money spent on goods and services. This metric is used to measure the efficiency of a company's procurement process and to identify areas where improvements can be made.
  
  How to use it: 
  The Contract Spend Ratio can be used to measure the efficiency of a company's procurement process. It can be used to identify areas where improvements can be made, such as reducing costs or increasing the number of contracts that are awarded. The Contract Spend Ratio can also be used to compare different suppliers and determine which one is providing the best value for money.
  
  Tips & Tricks: 
  When calculating the Contract Spend Ratio, it is important to include all costs associated with the procurement process, such as administrative costs, shipping costs, and taxes. It is also important to ensure that all contracts are included in the calculation, even those that are not yet active. This will ensure that the ratio is accurate and reflects the true cost of procurement.
  
  Related Information: 
  The Contract Spend Ratio is closely related to other metrics such as Total Cost of Ownership (TCO) and Return on Investment (ROI). These metrics can be used in conjunction with the Contract Spend Ratio to gain a better understanding of a company's procurement process and identify areas for improvement. Additionally, these metrics can be used to compare different suppliers and determine which one is providing the best value for money.