CPO Crunch: See savings as a starting point

Savings can be a dirty word in the complex, angst-ridden world of procurement. Ask your average CPO to talk about the issue and the chances are the conversation will quickly become derailed.

Two reasons. First, many CPOs view savings as fundamental, but no longer strategically critical to their strategies. In many conversations I’ve had over the years, savings have been explained away as housekeeping, the basics, an enabler to procurement being trusted enough to drive more ambitious projects and initiatives that bring value in bigger and better ways.

Second, the debate around what counts as a saving just doesn’t go away. Should they hit the profit & loss? Does avoidance count? What about demand management? With hungry CFOs desperate for bottom-line impact and budget-protecting functional heads keen to reallocate cost, rather than return it to the central pot, it’s a complex and emotive issue.

But as many of us continue to plough through budget season and as economic outlooks continue to present a challenge to growth, the focus on savings – and more broadly, productivity – are firmly back in vogue.??

A community call last week, led by a CPO from the business services sector and the firm’s enablement director, explored the issue in depth. While there were many questions about the approach they had taken and why, it wasn’t long before a debate into how participants track and treat actual versus projected savings was in full swing. It was lively, as you might expect.

Separately, our advisors have been on many calls with procurement leadership teams over the last couple of weeks to share the findings of our Strategic Planning Guide 2025 – Procurement Leaders' annual study that benchmarks how the community is performing and where CPOs' priorities lie.

Without going into too much detail, one insight jumps out at me. While the top three priorities are consistent across all three segments of maturity – savings, risk, speed of execution – only for high-maturity functions does revenue generation come next.

As Carel Aucamp, CPO at BAT, tells us: “Delivering savings is 70% of my job, but we don’t look at savings as the end point of a negotiation. We view it as a gateway to driving sustainability and net-turnover growth through coinnovation.”

So, while savings might come increasingly within the crosshairs of executive committees due to broader economic factors, CPOs must not lose sight of the bigger picture.

Announcing the Americas Procurement Congress 2025

Talking of planning for the year ahead, leaders in the Americas should circle 10–12 March in their diaries, as Procurement Leaders announces its return?to Miami for the second annual AI Forum and Americas Procurement Congress. Don’t miss this chance to learn from leading functions and connect with peers from across the region as we explore the future of the function.

Visit the APC website to discover more.