Eight savings myths debunked
Every year Grosvenor conducts a research study focusing on a specific area of procurement practice. These insights are used to inform our industry by aggregating real world experiences from Australian organisations and turn them into strategies that allow us to share knowledge and drive change within our own organisations.
In 2018, we set out to understand and quantify the kinds of initiatives procurement teams are undertaking to drive deeper cost savings, allowing us to challenge conventional thinking and revisit long held assumptions in search of new pots of undiscovered gold that may be hiding right under our noses. Here are our findings.
Cost savings not the top of your priorities right now? Stay tuned – this may be worth a second look!
It’s likely that your team has already invested many resources into finding and launching initiatives for cost saving across your organisation. Perhaps you’ve reached a point where the well seems dry?
Or, maybe you don’t see chasing “cost savings” as an effective platform to win a stronger strategic position within the organisation. This is a valid concern – too much focus on being a cost killer can pigeon hole your team as just that – cost killers.
Let me say, if you fall into either or both these categories this research is for you.
Why the dry well may be worth a second look
The title chosen for our study is the “Eight savings myths debunked”. This should provide a strong hint to the kind of insights we’ve been able to identify from the data.
You’ll see with the way we collected and structured the data, it clearly demonstrates that a number of assumptions and expectations commonly held about cost savings are not quite true. Some we were able to absolutely debunk as myths.
For those organisations willing to take another look, guided by new insights that come out of this study, there are likely to be some real opportunities waiting to be uncovered that generate significant cost savings over a 12-month period.
Become a cost killer to prove your strategic capability
All too often, we see that in order to help the business deliver against strategic objectives, we need to demonstrate a strategic approach to finding cost savings. Being able to achieve this and communicate it with convincing credibility is considered a necessary precursor to winning much more strategic influence within the business.
With this leverage, you may find it easier to gain the necessary support to implement higher value (often non-financial) initiatives to the business.
We surveyed the procurement teams within 159 Australian organisations, asking them about their most successful procurement initiative in the last 12 months and to quantify the benefits it delivered to their organisation.
We structured our collection of data in a way that allowed us to reconcile against the four spend levers of Pay Less, Buy Cheaper, Buy Less, Buy Smarter. These were then linked back to a set of seven savings indicators, which I explain in more detail in the study report itself.
Initially we analyse the data with a broad focus, then drill down into three industry specific verticals.