Many non-procurement executives and stakeholders are skeptical about the validity of the savings being touted by the procurement organization and about the degree to which they impact the company’s finances. Conversely, procurement outsourcing service providers are also asking how they can prove their value to buyers.

Without a disciplined approach to capturing, measuring and reporting procurement cost savings, companies run the risk of:

Miscommunicating the value delivered by a service provider or the procurement organization and, therefore, creating a perception of failure around other large procurement-led strategic sourcing initiatives or outsourced relationships.

Impairing the relationship between the client/company and the service provider and then, spending a disproportionate amount of time and resources measuring cost savings rather than focusing on delivering value.

This GEP-sponsored ISG white paper examines some of the key concepts involved in capturing and measuring cost savings from procurement initiatives. Since these concepts are essential to both clients/companies and procurement outsourcing service providers, their implementation can lay the foundation for a successful outsourcing partnership. An internal procurement organization can also use these concepts to measure and report the value it provides to its company.

 

Contributors: GEP
Categories: Whitepaper
SRC Type: Realization, Sourcing