Lost Sourcing Savings: Survey Data Suggests a Crisis
Last week, I participated in an ISM webinar highlighting how (and why) procurement organizations fail to implement sourcing savings. During the event, Spend Matters asked the audience (approximately 500 practitioners) a number of poll questions:
Does your organization have a formal program to ensure that identified savings through sourcing and supplier management programs become implemented savings numbers?
What percentage identified savings do you estimate that your organization successfully implements from sourcing and supplier management events and programs?
Your FORMAL sourcing process contains of which all steps from the following?
- Pre-sourcing analysis and planning
- Sourcing event execution
- Collaboration with suppliers during event
- Collaboration with stakeholders from other departments
- Bid optimization/Scoring
- Savings Tracking
- Savings approval from Finance Department
The responses surprised us. When we asked the first question, we got the following results:
This suggests a few key takeaways:
- Many organizations, even those with formal sourcing processes, have zero (or very limited) programs in place to implement savings results
- Nearly two-thirds of those surveyed work for procurement organizations that do not formally collaborate with other stakeholders in the business (let alone finance) to define, implement and measure savings from sourcing activities
- Programs and processes designed to implement sourcing savings are taking a back seat to other areas of procurement (e.g., req-to-pay) that require collaboration and involvement from finance and other parties alongside purchasing resources
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