What it is
A cost reduction program built to be measured on what reaches the P&L.
That framing changes the work. A program measured on negotiated savings optimizes for signatures, and a report full of signatures is easy to produce. A program measured on realized savings has to follow value past the signature into price files, purchase orders, invoices and behavior. That is harder and slower to look impressive, and it is the only version finance will defend.
Start by agreeing what counts
Before any number is claimed, procurement and finance should agree the definitions: what a baseline is, what counts as realized versus avoided, how long an initiative can be claimed for, and what evidence closes it.
This takes an afternoon and prevents the argument that otherwise arrives two quarters later. Our savings definition standard is the one-page version, free to take and use whether or not you work with us.
Where the value usually is
Price and competition. The obvious lever, and the one most often already pulled in the top categories. Frequently untouched below the top twenty suppliers.
Consolidation. Fragmented spend across many suppliers doing similar work, none with enough volume to price well.
Specification and demand. Buying a premium grade where a standard one performs, or buying volume nobody reviewed. Often the largest single source of value and the least contested by suppliers, because nothing is taken from them.
Leakage. Value already negotiated and never captured: prices not loaded into the system, rebates unclaimed, volume tiers missed, auto-renewals passed unnoticed. Usually the fastest money in the program and often recoverable retroactively. Our value leakage checklist covers where to look.
Terms and working capital. Payment terms, early payment discounts, inventory. Cash rather than margin, and worth reporting separately so it does not muddy the savings line.
Waves, sequenced by contract timing
Opportunities get grouped into waves by value and complexity. The critical factor is when the contract actually allows action. A large opportunity on an agreement signed eleven months ago is not a wave-one item, however attractive it looks on a slide.
Each wave has named owners in the business, not only in procurement. Savings without a business owner do not land, consistently and without exception.
Proving it landed
Every initiative is tracked from an agreed baseline through to invoices paid. Realized divided by negotiated gives the portfolio conversion rate, reported alongside the headline figure.
Reporting that gap rather than hiding it is what makes the number believable. A program converting at 70% and saying so has more credibility with a CFO than one claiming 100% that nobody can trace.
Where AI and data fit
Classification, supplier normalization, price variance detection, duplicate and anomaly identification and contract term extraction are all AI-supported. That is what makes it practical to examine the long tail rather than only the top twenty suppliers.
Every opportunity is reviewed by a human before it enters the pipeline, because an unverified opportunity that fails in front of a stakeholder costs more credibility than it was worth.
Outcomes we target
- An opportunity pipeline evidenced in your own transactions
- Savings definitions agreed with finance before anything is claimed
- Initiatives executed, not handed over as recommendations
- A conversion rate from negotiated to realized that you can report honestly
- Recovered leakage that pays for the program early
What you receive
Realized to date, against $6.30M negotiated$4.35M
Negotiated against realized, by initiative, on the savings definition finance agreed up front.
- An opportunity pipeline with baseline, value, complexity and owner per line
- A savings definition agreed with finance before anything is claimed
- Wave plans sequenced against contract and renewal timing
- Executed initiatives, not recommendations to execute them
- A realization tracker showing negotiated against realized, by initiative
- A quarterly report finance recognizes and will sign
Frequently asked questions
How much can we expect to save?
It depends on spend profile, how recently categories were competed and how much of the spend is addressable. That is why the honest answer comes after an assessment rather than before it. What we will commit to upfront is the method for sizing it and the evidence standard we hold ourselves to.
How quickly does value appear?
Leakage recovery and unclaimed rebates can land within a quarter. Sourced savings follow contract timing, so a category with a renewal in six months delivers on that clock, not on ours. Programs that promise fast savings across the board are usually counting negotiated numbers rather than realized ones.
What is the difference between negotiated and realized savings?
Negotiated savings are what a deal promises at signature. Realized savings are the portion that shows up in invoices actually paid. The gap between them is the most common reason savings reports lose credibility with finance, and closing it is the point of this work.
Will this damage supplier relationships or quality?
It should not, and where a lever would, we say so. Cost reduction that degrades service gets reversed within a year and costs more than it saved. Specification and demand work is often where value comes from precisely because it does not require squeezing a supplier.
Do you work on a contingency basis?
We prefer fixed or milestone-based fees. Contingency arrangements create an incentive to claim aggressively, which is exactly the behavior that makes savings numbers untrustworthy. The credibility of your reporting is worth more than the fee structure.