ABSTRACT
Procurement must balance four factors to achieve the desired outcome of achieving procurement savings. These four factors are: price, quality, quantity, and timelines. A procurement cost saving is only truly a saving when it is achieved by paying a reduced price for a product or service, without reducing or otherwise negatively impacting on the quality, quantity, or timeline. Price-based levers are the simplest and most used of the procurement value levers. Focused on getting best pricing for product/service through rigorous competition, this is the easiest to understand and implement. Pricing levers go beyond negotiating the best price and also include increasing spend covered by negotiated contracts. Supply-based levers provide additional opportunities when applicable. Examples include supplier development, leveraging supplier innovation through collaboration, and restructuring the supply base to better achieve delivered value. All of these levers are predicated on also defining and managing towards socioeconomic goals.
