A summary of responses received for this Peer2Peer inquiry is available below.
Original Inquiry
In reviewing Procurement savings benchmarking material, it can be challenging at times to determine how organizations define savings. How does your organization define / classify savings from Sourcing / Procurement initiatives?
How do you define Cost Reduction vs Cost Avoidance?
Do you factor P&L and/or budget impact into definitions
Do you report savings out on an annualized, in-year or life of contract basis?
Do you reduce budgets or forecasts by the amount of savings achieved?
What is the average % savings on an annual run rate basis that you are achieving? For comparative purposes, indicate whether the baseline used for the % calculation is annual spend, current year budget, contract value over life of contract or some other basis.
Additional Resources
Template: Procurement Guideline and principles related to Savings
Summary of Responses
Contributors: SIGCategories: P2P Archive, SIG U Resource, Tool
SRC Type: Sourcing