Procurement savings can be achieved in many ways, from negotiating better deals with suppliers to optimizing supply chain processes. Understanding the different types of procurement savings and how to track them effectively is essential for any organization looking to reduce costs and increase efficiency. In this essay, we'll explore some of the most common types of procurement savings, as well as strategies for measuring and monitoring them. 

• Price Savings: Price savings are the most common type of procurement savings, and they occur when a product or service is purchased at a lower cost than the original price. One way to track price savings is through a price variance report, which compares the current purchase price to the original price. According to a report by McKinsey, companies can achieve price savings of up to 15% by implementing a robust sourcing strategy. One example of a company that has successfully implemented price savings is Procter & Gamble (P&G). P&G implemented a centralized procurement strategy that allowed the company to negotiate better prices with suppliers, resulting in savings of over $1 billion in just two years. 
• Process efficiency savings: Process savings occur when the cost of a product or service is reduced through process improvements or supplier negotiations. One way to track cost savings is through a cost variance report, which compares the current cost of a product or service to the original cost. A report by Forrester states that companies can achieve cost savings of up to 30% by automating their procurement processes. One example of a company that has successfully implemented cost savings is Coca-Cola. Coca-Cola implemented a procure-to-pay system that allowed the company to streamline its procurement processes and negotiate better prices with suppliers, resulting in cost savings of over $1 billion. 
• Value Savings: Value savings occur when the total value of a product or service is increased through improvements in quality or functionality. One way to track value savings is through a value analysis report, which compares the current value of a product or service to the original value. A report by Everest Group states that companies can achieve value savings of up to 20% by implementing a value engineering program. One example of a company that has successfully implemented value savings is Boeing. Boeing implemented a value engineering program that allowed the company to improve the quality of its products while reducing costs, resulting in value savings of over $4 billion. 
• Compliance savings: These are savings achieved by ensuring compliance with procurement policies, procedures, and regulations. This includes avoiding non-compliance penalties, reducing risk, and improving governance. For example, a leading pharmaceutical company, Pfizer, implemented a centralized procurement function to ensure compliance with regulatory requirements and improve governance. This resulted in a 20% reduction in supplier risk and a 15% reduction in procurement costs. 
• Demand management savings: These are savings achieved by optimizing demand for goods and services through better forecasting and planning. This includes reducing demand for unnecessary goods or services and reducing the frequency of purchases. For example, a global technology company, Cisco, implemented a demand management program that reduced the number of suppliers and improved forecasting accuracy. This resulted in a 15% reduction in procurement costs. 

In conclusion, procurement savings can come in many forms and can have a significant impact on an organization's bottom line. By understanding the different types of savings and implementing effective tracking and monitoring systems, companies can identify areas for improvement and make strategic decisions that benefit their business over the long term. By implementing best practices, organizations can achieve sustainable savings and create a competitive advantage in their respective markets. 

At FactWise, we are committed to helping our customers become successful by being prudent about their costs. We can successfully increase governance by 31%, thus improving compliance savings. Furthermore, we can streamline current processes to drive efficiency to up to 20% while also driving bottom-line impact by unlocking pricing savings to up to 25% for direct spend.