Measuring and Getting Credit for Realised Savings in Indirect Spending

It is paramount today that the procurement function have the ability to track non-core, or indirect, costs and document savings on these expenditures. The reason procurement executives should care about savings visibility on non-core spend goes beyond the fact that they can equal 15%-40% of company revenue.

The Hackett Group has found that companies capable of tracking realised savings as they occur, as opposed to booking the savings promised at the time supplier contracts are negotiated, see 71% higher actual savings. The problem is that measuring savings on indirect spending is deceptively difficult. Achieving savings visibility requires a combination of technology, process and expertise and deep collaboration with the finance organisation.

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