Why It’s Time to Drop “Savings” as a Procurement Metric
Savings has long been the dominant metric for evaluating procurement performance. On the surface, it seems a natural fit: procurement manages external spend, so measuring how much it “saves” must reflect its value. But this logic doesn’t stand up to scrutiny—and in many cases, it actively undermines good business practice. It’s time we dropped savings as a procurement metric altogether.
1. Budgetary Control Already Exists
Assigning Procurement the responsibility of reducing other departments’ budgets creates a structural contradiction. Each function already operates within its own budgetary limits, with direct incentives to manage costs and improve efficiency. When Procurement is measured by how much it “saves” against those budgets, it duplicates or distorts incentives. Worse, it risks disempowering internal stakeholders, turning Procurement into an enforcer rather than a collaborator.
Budget ownership should remain where it belongs—with the people who understand the operational trade-offs. Procurement’s role is to support intelligent spending, not to second-guess or override decisions under the banner of “savings.”
2. Savings Metrics Encourage Perverse Priorities
Procurement professionals quickly learn which activities deliver easy, reportable savings—and which don’t. The system rewards the low-hanging fruit: purchases with inflated initial quotes, minimal internal scrutiny, and no real challenge on suitability or business need.
In contrast, high-value projects that require early engagement, thoughtful requirements analysis, and cross-functional collaboration often yield better outcomes but less measurable “savings.” Worse, these projects may not lead to a purchase at all—rendering them invisible in savings reports.
So long as savings remain the primary performance indicator, Procurement is incentivized to chase the most easily measurable wins, not the most meaningful ones.
3. Price Rises Are Quietly Ignored
Procurement rarely reports price increases as “negative savings.” In fact, there’s a subtle advantage to letting prices drift upward. It creates a new, higher benchmark that makes future “savings” easier to demonstrate. Over time, this practice distorts the baseline and obscures actual spend performance.
Even more troubling, there are instances where Procurement teams deliberately delay negotiations on new products because no internal benchmark exists. Once a first purchase is made—possibly at a high price—the buyer can return later, negotiate a reduction, and claim the difference as a saving. This isn’t value creation. It’s accountancy theatre.
4. Natural Price Reductions Are Often Misreported
Not all price changes are the result of Procurement action. Volume rebates, changes in product specifications, market shifts, and technological improvements can all reduce costs. Yet when these reductions occur, there’s a temptation to sweep them into the savings ledger as evidence of Procurement performance.
This practice inflates the reported impact of the function while eroding trust. At best, it is misleading. At worst, it is indistinguishable from manipulation.
5. Gaming the System Becomes Normalized
One of the most troubling patterns is when Procurement encourages suppliers to inflate quotes in order to “negotiate” down to a more reasonable figure. This staged performance allows buyers to record a saving that never really existed.
Such tactics are rarely seen as fraudulent within companies. But when these inflated savings are rolled into external productivity figures or annual reports, the line between performance measurement and false accounting becomes dangerously blurred.
6. From Metrics to Misconduct?
Many large organizations now report procurement savings under the heading of productivity gains. If these numbers are built on manipulated benchmarks, ignored price increases, or contrived negotiations, they may mislead investors and regulators. At scale, that’s more than just a bad metric—it’s a governance risk.
A Line in the Sand
None of this is to say Procurement has no role in managing cost. But as long as it is defined by “savings,” the function remains trapped in a cycle of artificial benchmarks, superficial wins, and tactical irrelevance.
Some companies have already recognized this and abandoned savings as a performance metric altogether—freeing their Procurement teams to focus on outcomes that actually matter. Yet many others remain stuck, unable to let go of the illusion of control that savings reporting provides.
At times, there’s even a quiet conspiracy at play. C-level executives, fully aware that reported savings are often overstated or misleading, nevertheless praise them as if they were sacred truths—comforting, uncontroversial, and virtuous, like motherhood and apple pie. Why? Because the illusion of Procurement-driven savings distracts attention from their own budgets, and subtly transfers accountability for cost control away from the business and onto a convenient scapegoat. In applauding Procurement’s “successes,” they become willing accessories to the deception.
The answer is not better savings reporting or new calculation methodologies. It’s to abandon the metric entirely.
Only then is Procurement forced to ask—and answer—the real question: What is our distinctive value?
Without the crutch of claimed savings, Procurement must either prove its worth through smarter decision-making, improved supplier performance, risk mitigation, and strategic contribution—or face the truth that it has none. That is not a threat. It is an opportunity.
Remove savings, and Procurement becomes what it should have been all along: not a counter of pennies, but a creator of value.