Savings to Value: Cranking Up the Volume

Tired of playing the same old savings tune? Join the Proc-N-Roll crew as they turn up the volume on procurement’s evolution from pure cost-cutting to driving real business value. Procurement veterans Zach, Natasha, and Conrad share war stories about breaking free from the “S-word” stigma and reveal how modern teams are becoming strategic rockstars. Discover how procurement is writing its next platinum hit, from talent transformation to supplier partnerships. Get ready to crank it up and learn why the future of procurement isn’t just about counting pennies – it’s about composing business success.

Tune in to hear why doing the right thing for your business might just be procurement’s greatest hit yet!

Watch now or read the transcript below.

Transcript: Proc-N-Roll 10 | Savings to Value: Cranking Up the Volume

Zachary | Hello, everyone. Welcome to Proc and Roll, your guide to practical procurement, where we make procurement rock and roll. We’ve got Natasha, the Pro CPO, Conrad, the innovator, and myself, your expert on all things procurement. We join you with almost 70 years of practical procurement experience. Here at Proc and Roll, we discuss the latest and greatest trends and topics in procurement. Let’s jump right into our episode for today: From savings to value.

A few weeks ago, we released our Proc Enroll 2025 predictions. Natasha and I both predicted that during the year ahead, the high maturity procurement teams will continue to shift from a focus on savings to a focus on value. This is a long-term critical trend that continues to show up in procurement functions. Let’s talk about savings and historically how procurement has been tasked with delivering those savings, and then what that transition looks like in terms of moving to delivering value. Conrad, can you get us started?

Conrad | When I started in procurement in the mid-90s at Intel, they were very savings focused. I was in a buyer role responsible for stewardship of savings. We were responsible for getting a certain percentage of cost savings. I was fortunate to be on the technology side, delivering 15 to 20% savings consistently. But I observed some concerning behaviors from a reporting perspective. People became creative with savings calculations because it was the core metric. They counted first 12 months savings, forecasted potential supplier consolidation savings that rarely materialized, and removed numbers from denominators. There were multiple versions of spend truth. We could discuss direct savings, indirect savings, and avoidance extensively. While savings doesn’t disappear as we shift to value, we need to be more mature in our approach.

Zach | I agree. There’s such emphasis on savings that defining and reporting savings consumes so much time that you miss opportunities to leverage other value drivers that might not be as easily quantifiable. Natasha, what’s your experience?

Natasha |  In most companies I’ve worked with, savings was the S-word – it had a terrible reputation. But let’s think practically – if someone offers to help you keep more money in your pocket, would you refuse? Whether for an individual or organization, would you decline to pay less for essential business items?

I think savings is considered problematic and creates suspicion because it’s difficult to prove its reality. Many procurement professionals struggle with establishing credibility that savings are real, not theoretical. With long-term contracts, tracking savings becomes complex as personnel changes and baselines shift after 12 months due to P&L resets. Organizations need to focus on making savings real and credible.

Conrad |  At Adobe, we had finance validate our calculations using an established formula. Interestingly, when reported to the CFO, they still questioned the credibility of savings. The CFO wanted tangible evidence – metaphorically, a wheelbarrow of money. They wondered, “Where is this money you saved?”

Natasha | Those are two different questions. Perhaps the CFO didn’t question calculation credibility since their finance team validated the savings. Very few companies know how to track savings to the bottom line. They might believe the contract achieved price reductions and P&L impact but don’t see it reflected in P&L or budget. Validation and tracking are distinct challenges.

Zach | This demonstrates that savings remains on the agenda and CFOs want visibility. But focusing solely on driving savings loses perspective. Let’s discuss total cost of ownership (TCO). With a TCO approach, you might generate savings from various parts of the operating or purchasing model. Should we stop trying to validate every penny saved and demonstrating cash impact? Should finance empower procurement by agreeing to methodologies and trusting that procurement delivers value to the bottom line?

Conrad |  Total cost of ownership represents a step in the journey from price focus to value focus. If you’re examining TCO maturely, it’s almost the value journey itself. It’s about looking beyond price during negotiations and understanding what matters to the organization – whether that’s reduced maintenance costs, smaller server footprint, or freed warehouse space from suppliers. There are many TCO elements that, when approached properly rather than formulaically, begin to shift thinking toward value.

Zach |  But it becomes challenging to explain to finance because they need to understand the category or product specifics and how you’ve broken down different cost elements to achieve savings. Natasha, your experience with TCO?

Natasha | Let’s return to value. Value is perceived differently not just across companies but within the same organization. Legal values risk management, marketing values market presence, supply chain values available capacity. How does procurement structure its approach to driving value? It’s important for procurement professionals to customize their value proposition to different groups based on their priorities versus procurement’s priorities. This connects to our previous discussions about building strong stakeholder relationships and impacting spend under management by speaking their language rather than procurement jargon.

Conrad | I agree. The core purpose is enabling business success. What defines success varies by function, company, and even time period based on maturity and changes. When you ask about success metrics, it’s easy to focus on tangible cost savings and pricing formulas. But enabling business success is complex and means different things. The goal is business success, which could involve sustainability, local spending, and various other factors. We’re here to enable business success, which differs across functions and companies.

Zach | Let’s discuss making this transition real. I see three key pillars: First is talent – ensuring you have the right people focused on the right objectives, moving beyond transactional mindsets to form stakeholder relationships. Second is stakeholder relationship management – knowing your stakeholders, understanding their goals, and proactively finding ways to add value. Third is supplier relationship management – managing both stakeholders and suppliers to drive end-to-end value.

Consider examples like Intel emphasizing innovation and sustainability, focusing on superior technology quality and collaborative supplier partnerships. Tesla focuses on integrating advanced technology and sustainable energy. Coca-Cola prioritizes sourcing responsibility and supply chain transparency. Transport for London addresses talent shortages and workforce diversity. These procurement organizations drive value differently. Would you agree with these three pillars?

Conrad | The stakeholders help us understand what value matters, talent enables us to pursue it, and suppliers help execute and deliver. That’s a solid framework for making this work.

Zach |  Let’s start with talent. What skills and behaviors are needed to transition from savings-driven to value-driven procurement? Natasha?

Natasha |  Returning to our discussion about intellectual curiosity and problem-solving, procurement professionals are matchmakers between stakeholders and suppliers. When you understand business objectives, stakeholder goals, and supplier solutions, you can create powerful solutions. Sometimes paying more to reach market faster and generate revenue is a well-calculated decision.

Zach | So you need talent that can understand stakeholder and business objectives and connect dots. It’s more of an enterprise mindset. Today’s procurement professional is different – instead of CVs highlighting savings amounts, you’re looking for sales or consulting skillsets.

Natasha | I wouldn’t differentiate between consulting or traditional procurement backgrounds. Problem-solving and critical thinking are trainable skills. Your perspective depends on your procurement environment – whether low-maturity purchasing, manufacturing with volume-driven negotiations, or diverse indirect procurement requiring constant adaptation.

Zach | How do you shift the culture in a low-maturity organization focused on savings and lowest prices? While getting efficient pricing matters, there’s always value beyond savings. How do you develop this mindset in your team?

Conrad | When I started, we worked in cubicles with minimal interaction. It was very transactional and administrative. Eventually, we emerged to engage differently with stakeholders and suppliers. Most organizations are somewhere along this journey. Many have created buy desks to handle transactions, freeing sourcing and category managers for strategic work. Success depends on recognizing whether your team has the right capabilities. Using stakeholder mapping helps understand gaps in team connectivity and business understanding. People can learn these skills – I’m an introvert who learned to engage over 30 years.

Natasha | Procurement effectiveness often measures savings delivered. A brave CPO frees the team from numerical pressure, showing the annual target but telling them to focus on doing what’s right for the company. When category owners thoroughly examine spend and make right choices for the company, savings naturally follow.

Conrad | When I moved into leadership at Adobe, I stopped reporting monthly savings to the CFO. It took almost two years before he asked about it, leading to valuable discussions about budget mechanics and savings realities. Setting aside savings metrics is scary, but CFOs want to understand and support us beyond formulaic approaches.

Natasha | Clear procurement strategy and functional connectivity drive savings naturally. Chasing numbers can incentivize wrong behaviors at the expense of business needs. Some CFOs prioritize spend under management over savings targets, recognizing the value of procurement’s comprehensive review of payment terms, supplier risk, consolidation opportunities, and operational efficiency.

Zach | After addressing talent and stakeholder management, how do we engage suppliers in this transformation?

Natasha | Suppliers are always willing to engage. The challenge is identifying right partners through thorough market assessment. Segmentation requires understanding your business and key players. Don’t automatically choose large proven solutions – niche solutions often better serve business objectives.

Conrad |  Segmentation helps understand how suppliers align with business objectives. If environmental sustainability is a priority, we identify suppliers impacting carbon footprint and develop relevant KPIs. Different supplier segments require different metrics – marketing suppliers focus on creativity and innovation while cloud providers have different priorities.

Zach |  Suppliers often expect purely cost-focused discussions based on past interactions. It surprises them when we prioritize other objectives before pricing.

Natasha | Communication is key to successful relationships. Procurement often withholds information unnecessarily, expecting suppliers to read minds. While some information remains confidential, clearly stating intentions, objectives, and challenges helps suppliers understand how they can help.

Zach | Procurement teams often poorly communicate objectives, while suppliers better understand the big picture when meeting business stakeholders directly. Assuming suppliers want to collaborate and help has served me well, rather than viewing them as adversaries.

Conrad | This connects to talent – you need people who can build relationships, communicate clearly, and collaborate effectively. If removing procurement from supplier-business relationships would improve them, you’re not adding value.

Zach | Great point. We’ve covered the three pillars: talent, stakeholder relationship management, and supplier relationship management. Procurement teams should reevaluate supplier relationships, connect with industry peers, and engage more with business stakeholders. While savings remain important, teams should proactively segment and manage more spend, driving different types of value from various suppliers. Could focusing on value actually lead to greater savings long-term?

Thank you to our listeners. I hope you enjoyed this episode. We’ll certainly discuss savings and value more in future episodes. Thank you, Natasha and Conrad.

This transcript has been edited for clarity while maintaining all substantive content