From one-off savings to sustained margin discipline in private equity

By Wiebe van der Kamp

In PE-backed businesses, procurement is often used as a short-term lever to release cash for other transformation initiatives, before attention shifts elsewhere. Initial savings are delivered, but then value erodes over time as spend creeps back, supplier discipline weakens, and ownership diffuses. Treating procurement as an intervention, not a system, limits its impact to a one-off uplift instead of an ongoing source of margin improvement. Extended hold periods make this value erosion increasingly costly. 

PE Operating Partners cannot afford to keep treating procurement as a one-time cost initiative; it needs to be embedded as a sustained margin discipline. 

Sustaining procurement value over time requires a set of structural enablers that embed accountability and prevent value leakage: 

Many procurement programmes deliver strong initial results through renegotiations or sourcing events, but value often erodes when ownership is fragmented and savings are not actively tracked. Embedding executive sponsorship, clear governance and robust performance monitoring helps ensure that procurement improvements are sustained over time, with benefits reflected in budgets and financial performance rather than disappearing after the initial intervention.

Timing can determine whether procurement creates temporary uplift or lasting impact. Moments of change create opportunities to reset operating models. The key is to use these inflection points to embed lasting procurement discipline, rather than deploying one-off interventions. 

• Carve-outs and integrations, where procurement structures can be reset from day one 
• Inflationary shocks create a burning platform to renegotiate and consolidate spend 
• Budget cycles create a natural entryway to embed procurement targets into P&L forecasts 
• Pre-exit optimisation creates an opportunity to deliver a procurement-driven EBITDA uplift that strengthens valuation multiples 
• Portfolio build out – as funds scale across multiple assets, shared category strategies (e.g. logistics, packaging, IT) can be introduced to combine volumes and unlock better pricing and terms. 
  
   

Most PE firms recognise procurement as a source of short-term value. In today’s extended hold environment, the differentiator will be whether that value holds. 

Well-structured procurement programmes can contribute between 3–6% EBITDA uplift. The greatest opportunity for operating partners right now is turning procurement from a periodic initiative into a consistent driver of margin improvement.