Cost Savings through Strategic Sourcing
Category: Strategic
Measures the savings generated through strategic sourcing initiatives, such as supplier negotiation and process optimization.
What it Measures ?
Tracks money saved through smarter supplier negotiations.
Relevant StakeHolders
Procurement Head, Strategic Sourcing Manager
Why it Matters ?
Enhances cost savings and procurement efficiency.
In-depth Use Case / Real-world Example
A company manufacturing electronics calculates Cost Savings through Strategic Sourcing by comparing the cost of goods before and after renegotiating contracts with suppliers or sourcing from more cost-effective suppliers. For example, if the company saves ₹10 crore annually after a strategic sourcing initiative, this KPI helps quantify the value of procurement optimization.
Sample Formula
Savings Achieved / Total Procurement Spend