How changing buyer behaviour can double procurement savings

How changing buyer behaviour can double procurement savings

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?

This year, Grosvenor Management Consulting 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. 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

Next Article

2018 Procurement Study

Eight Savings Myths Debunked

Findings from our 2018 Procurement Study

We studied 159 organisations, asking them about their most successful procurement initiative in the last 12 months and benefits achieved.

The research is in:

  • Real data and insight from your peers
  • A summary of 8 procurement savings myths that you thought were true
  • As each myth is debunked, new insights are revealed by the data
  • You can have better performance and higher savings
  • Identify how you can predict which contract has the highest potential for additional savings