Measuring implemented savings to foster better collaboration between procurement and finance
In this webinar, we covered why the mismatch between savings promised by the CPO at the start of the year, and savings that hit the bottom line at the end of the year, exists, and offers practical tips and advice for how to close the gap between reported and realized savings.
Generating cost reductions is a fundamental goal of any procurement function, and ‘realized savings’ are usually a key KPI. Yet in many organizations there seems to be a perennial mismatch between what is promised by the CPO at the start of the year, and what is found in the P&L at the end of the year.
Why does this mismatch exist? Were the CPO’s projections unrealistic? Did the savings simply not happen, despite being reported? Or did they happen, but can’t be pinpointed in the P&L?
Our experience shows that where procurement teams disengage with the business immediately following the sourcing phase or are not privy to the implementation phase, savings realization drops to a mere 50% of the originally identified savings, annihilating the hard work done upstream.