Savings reports are one of the first steps in implementing a strong category management process. Are you utilizing your savings reports to the best of your ability?
Realizing cost savings will always be one of the most important objectives of the procurement function. However, savings cannot be realized without a substantial amount of gathered information. As novelist James Baldwin once said, “Know from whence you came. If you know whence you came, there are absolutely no limitations to where you can go.” Quantifying the historical baseline of a contract will help determine savings against that baseline and ultimately guide future category management decisions and activities.
Savings reports look at what an organization is currently paying and compares that to the price in a prior period. It gives the basis for identifying opportunities and risks while also providing the premise for cost reduction initiatives.
Savings reports will give you a better insight into:
- Hard savings being generated by the contract
- Changes in buying trends over time
- Increases implemented by a supplier
- Which locations are most compliant and generating the most savings (and which are least)
The basic savings calculation is simple:
At CoVest, we ensure we have the most accurate information for our members in order to capture the incremental annual savings. What makes CoVest savings reports different is that they are intended to capture reportable savings following the members accounting guidelines. This can be "hard savings", e.g. exact SKU price reduction and equally important "soft savings" from such things as SKU consolidation and substitution.
Savings are based upon current period actual expenditures and performed at an item level. CoVest also provides flexible reporting that can be tailored to the member, with additional summaries or calculations alterations to meet the particular reporting needs of a member.
If you're interested in learning more about our saving report process or how we do our calculations, feel free to CONTACT US.
Read next blog in Category Management series: Why Utilizing Compliance Reports Make a Difference
Download our Infographic for a visual explanation of