How to calculate procurement savings?

When it comes to procurement, one of the main goals is to save money. But how do you know if you’re actually achieving cost savings? Here’s a guide on how to calculate cost savings in procurement.

First, you need to identify the baseline cost. This is the cost of goods or services before any changes are made. Next, you need to identify the target cost. This is the cost that you’re aiming to achieve through procurement savings. Finally, you need to calculate the difference between the baseline cost and target cost. This will give you your total potential savings.

To get a more accurate picture of your procurement savings, you can also track other factors such as quality and delivery time. By tracking these factors, you can ensure that your procurement savings are not coming at the expense of quality or service levels.