How changing buyer behaviour can double procurement savings

Grosvenor Management Consulting offers a unique view on how procurement savings can deliver significant benefits to your organisation's bottom line.

Image: Catlane

With their focus on keeping supplier costs down, Australasian Chief Procurement Officers are used to having their attention trained on the external market: but did you know you can almost double your savings by turning your attention inside the organisation too?

Grosvenor Management Consulting surveyed hundreds of top procurement professionals in Australasia to understand which spend levers they are using, and which are the most effective. What we discovered might surprise you.

The biggest savings are to be found in your office

Yep, that’s right. Sure, keeping supplier costs down is still an important part of the puzzle, but simply encouraging coworkers to buy less could more than double the savings most CPOs are generating by using common-or-garden “Pay Less” supplier-focused strategies alone.

The opportunities for your co-workers to consume less are almost endless: from going paperless, to traveling less, to minimising waste. Not only will these tactics boost your savings (by almost double, in some cases), it will give your company’s green creds a lift too.

Industry and the Public Sector: a potential goldmine of savings

Buying less offers the biggest returns for Industry (a potential saving increase of 148%), and the Public Sector (a potential saving increase of 100%), but the take-up of this lever is relatively small within these sectors, at 24% for Industry and 18% for the Public Sector. Imagine the potential savings once they get into the habit of buying less!

The unique challenges of changing buyer behaviour

Of course, changing the buying and consumption patterns of your team-mates is not without its challenges: this type of behaviour change and influencing is often outside the direct control – and the comfort zone – of the average CPO. But you can take heart from the knowledge that even the smallest change can make a big difference in your organisation’s operating costs.

Here are a few for starters:

Some quick wins to get you started

  • Think critically about reorder quantities: are the items really needed? If yes, only order replacements when you need them, keeping stock levels down
  • Wherever possible, replace meetings with calls and virtual conferences
  • Place productivity risk onto the service provider and change to fixed fee arrangements – a particularly healthy process when outsourcing Professional Services

Tips for getting your people on board

  • Reduce budgets and encourage all staff members to take ownership by communicating them clearly
  • Run an internal competition and brainstorm consumption-reducing initiatives in your organisation
  • Record the savings and celebrate them with your colleagues. How about a leadership board showing the department that reduced consumption the most?
  • Set targets and have fun prizes for meeting them
  • Don’t be shy to piggyback off the green ‘consume less’ agenda

Ready to take advantage of the huge savings offered by buying less? Download our eBook to find out how.

Yes! Please send me my copy of Grosvenor’s 2015 CPO Study: Emerging trends in advanced spend levers.

View Grosvenor Management Consulting Profile

Grosvenor Management Consulting has over 20 years of experience in procurement for both the public and private sectors. We help clients decrease risk, control spend, improve efficiencies and optimise performance every step of the way. We have partnered with PASA to survey hundreds of top procurement professionals in Australasia. We wanted to understand which spend levers they are using, and which are the most effective. Advanced spend levers offer a host of untapped savings potential. Download Grosvenor’s 2015 CPO Study: Emerging trends in advanced spend levers, to find out more about these levers and learn how to implement them today.

Contact Dr Stefan Gassner, leader of Grosvenor’s Procurement and Contracting practice, to discuss how you can benefit from advanced spend levers in your organisation.

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