If you’re waiting for savings, you’re missing on cost avoidance.
Today’s post is by Dave Wenig, Senior Vice President of Sales and Services at SafeSourcing.
I recently had a conversation with a procurement professional who is responsible for generating savings for his organization. His job is to use his skills to purchase goods and services at a better cost than they have been able to do previously. It’s simple and it’s common.
As you may know, this market has seen astronomical cost increases across nearly every category there is. This poses quite a challenge for the procurement professional as his livelihood depends on his ability to achieve savings.
Yet, there is a tendency within some organizations to view savings as a rigid formula where current cost – new cost = savings. I absolutely get that and have worked for many years to achieve that very goal consistently.
That said, the conversation must shift, and procurement professionals need to be held to a more realistic standard. In this market, cost avoidance is just as valuable. If an organization waits until the market allows traditional savings as defined above, then they will lose out on the savings they can achieve through cost avoidance.
Accepting vendors’ price increases as-is because “not is not a good time” to source a category is to agree to pay more than you have paid before. If you use tools like our eProcurement RFQ, for example, in this market, you might avoid that cost increase altogether.
What exactly are you waiting for?
Contact SafeSourcing with your procurement needs and we can help. If you would like more information on how SafeSourcing can help your procurement efforts, or on our Risk Free trial program, please contact a SafeSourcing Customer Service Representative. We have an entire team ready to assist you today.