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There is a growing interest in how procurement teams can most effectively communicate the value of the procurement function within their organizations. After the publication of the June/July issue of Government Procurement featured an overview of the 5 Steps to Communicating the Value of Procurement presentation at Forum 2014, Spikes Cavell received many new registrations for Measure, a tool provided for free to NIGP National Agency Members to record and report their procurement team's value. To assist the folks who registered get started and continue the discussion about how to most effectively communicate delivered savings, this article focuses on one of the most important terms that procurement practitioners need to define clearly in order to communicate their value.
In some organizations, the term savings has been so often abused that procurement teams have to resort to using code words to describe the monetary contribution that the procurement function makes to its organization. And just as it's important to define spend ( GovPro June/July 2013) in the context of any discussion of procurement, it is very important to be specific and consistent with the terminology used around and definition of savings. Otherwise, your claim to have saved $30,000 will almost always be met with the questions: "Where is the money then, and how can we spend it on something else?"
DEFINING SAVINGS
It is important that procurement teams don't shy away from communicating their value in dollars-and-cents terms, nor from using the word savings, but they should be precise enough in their language that they don't misrepresent the value that the team delivers. Your defined savings should be broken down into two...