{"id":2653,"date":"2009-05-13T13:48:00","date_gmt":"2009-05-13T13:48:00","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/2009\/05\/13\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/"},"modified":"2021-07-19T04:10:34","modified_gmt":"2021-07-19T08:10:34","slug":"whitepaper-wednesday-cost-savings-as-a-performance-priority","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/","title":{"rendered":"Whitepaper Wednesday &#8211; Cost Savings as a Performance Priority"},"content":{"rendered":"<p>Welcome back to another weekly installment of Whitepaper Wednesday here on the Purchasing Certification Blog. Today, I will review a whitepaper entitled \u201cThe CPO\u2019s Agenda: Smart Strategies for Tough Times\u201d from Aberdeen and Ariba.<\/p>\n<p>Don\u2019t miss updates on Procurement &amp; Supply Chain, Subscribe here!<\/p>\n<p>This whitepaper is based on a recent survey of over 200 chief procurement officers. This survey was conducted to learn what is top of mind for today\u2019s CPO\u2019s.<\/p>\n<p>This whitepaper revealed many interesting statistics. While it is no surprise that \u201cidentifying cost reductions\u201d was the top issue pressuring CPO\u2019s (at 91% of CPO\u2019s reporting this is a \u201ctop three pressure\u201d), I find it quite intriguing that the whitepaper notes that \u201cacross a decade of global supply management research, Aberdeen has never seen the pressure to find savings reach this high level.\u201d<\/p>\n<p>In case you\u2019re curious, the other top CPO pressures were:<\/p>\n<ul>\n<li>Mitigate supply risk \u2013 47%<\/li>\n<li>Improve processes \u2013 26%<\/li>\n<li>Optimize working capital \u2013 24%<\/li>\n<\/ul>\n<p>Speaking of cost savings, the whitepaper goes on to distinguish between best-in-class procurement teams and the rest using two metrics: spend under management and cost savings as a percentage of total spend. The whitepaper indicates that the best-in-class have 88% spend under management and have cost savings that are 8.5% of total spend as compared to an industry average of 64% and 5.2%. The whitepaper also shares metrics for the \u201claggards\u201d whose spend under management is 23% and their cost savings are 3.7% of total spend.<\/p>\n<p>These statistics I find to be a slight bit puzzling. Especially in light of the following excerpt describing them: \u201c[M]anaging a high percentage of spend does not in and of itself guarantee efficient or effective management; but, over years of benchmarking thousands of procurement departments, Aberdeen has identified a high correlation between high percentages of this metric and high performance in other KPI\u2019s.\u201d<\/p>\n<p>Those words make sense. If a procurement department has earned the right to manage more spend, it probably does have the capability to deliver more savings per dollar of spend. But let\u2019s consider transforming a laggard procurement department to a best-in-class procurement department using Aberdeen\u2019s numbers.<\/p>\n<p>I\u2019ll use a total spend of $1,000,000 to make this easy.<\/p>\n<p>The laggard procurement department would then manage $230,000 of spend and save $37,000. Thus, the laggards\u2019 savings as a percentage of managed spend (not total spend) is 16%.<\/p>\n<p>The best-in-class procurement department would then manage $880,000 of spend and save $85,000. Thus, the best-in-class\u2019 savings as a percentage of managed spend (not total spend) is 10%.<\/p>\n<p>At face value, this seems to contradict the foregoing claim by Aberdeen \u2013 it actually seems that performance suffers as a result of managing more spend. My guess here is that Aberdeen meant that the savings-as-a-percentage number was a percentage of the spend that procurement is responsible for, not total spend (only a portion of which procurement is responsible for).<\/p>\n<p>When a whitepaper confuses me, I generally stop reading it and that\u2019s exactly what I did here. The whitepaper does go on to have sections on supply risk management, benchmarking, and recommended steps to success. So perhaps you will find them valuable as they are all relevant topics. And I have an extremely, extremely high amount of respect for the work of the author \u2013 Andrew Bartolini \u2013 so maybe it\u2019s just me\u2026<\/p>\n<p>If you want to download your own copy of the whitepaper, you can do so from Ariba\u2019s Resource Center.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Welcome back to another weekly installment of Whitepaper Wednesday here [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":4039,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2653","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v19.13 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Whitepaper Wednesday - Cost Savings as a Performance Priority - Next Level Purchasing Association (NLPA)<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Whitepaper Wednesday - Cost Savings as a Performance Priority - Next Level Purchasing Association (NLPA)\" \/>\n<meta property=\"og:description\" content=\"Welcome back to another weekly installment of Whitepaper Wednesday here [&hellip;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\" \/>\n<meta property=\"og:site_name\" content=\"Next Level Purchasing Association (NLPA)\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/NextLevelPurchasing\/\" \/>\n<meta property=\"article:published_time\" content=\"2009-05-13T13:48:00+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2021-07-19T08:10:34+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/11\/nlpa-images-048.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1600\" \/>\n\t<meta property=\"og:image:height\" content=\"1196\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/jpeg\" \/>\n<meta name=\"author\" content=\"Galo Matagay\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@nextlevelpurch\" \/>\n<meta name=\"twitter:site\" content=\"@nextlevelpurch\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Galo Matagay\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/#article\",\"isPartOf\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\"},\"author\":{\"name\":\"Galo Matagay\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/72d094fab77892483dfa6e061cb27eaa\"},\"headline\":\"Whitepaper Wednesday &#8211; Cost Savings as a Performance Priority\",\"datePublished\":\"2009-05-13T13:48:00+00:00\",\"dateModified\":\"2021-07-19T08:10:34+00:00\",\"mainEntityOfPage\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\"},\"wordCount\":573,\"publisher\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#organization\"},\"articleSection\":[\"Procurement\"],\"inLanguage\":\"en-US\"},{\"@type\":\"WebPage\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\",\"url\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\",\"name\":\"Whitepaper Wednesday - Cost Savings as a Performance Priority - Next Level Purchasing Association (NLPA)\",\"isPartOf\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#website\"},\"datePublished\":\"2009-05-13T13:48:00+00:00\",\"dateModified\":\"2021-07-19T08:10:34+00:00\",\"breadcrumb\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/#breadcrumb\"},\"inLanguage\":\"en-US\",\"potentialAction\":[{\"@type\":\"ReadAction\",\"target\":[\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/\"]}]},{\"@type\":\"BreadcrumbList\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/#breadcrumb\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Home\",\"item\":\"https:\/\/www.certitrek.com\/nlpa\/\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"Whitepaper Wednesday &#8211; Cost Savings as a Performance Priority\"}]},{\"@type\":\"WebSite\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#website\",\"url\":\"https:\/\/www.certitrek.com\/nlpa\/\",\"name\":\"Next Level Purchasing Association (NLPA)\",\"description\":\"The Next Level Purchasing Association\",\"publisher\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#organization\"},\"potentialAction\":[{\"@type\":\"SearchAction\",\"target\":{\"@type\":\"EntryPoint\",\"urlTemplate\":\"https:\/\/www.certitrek.com\/nlpa\/?s={search_term_string}\"},\"query-input\":\"required name=search_term_string\"}],\"inLanguage\":\"en-US\"},{\"@type\":\"Organization\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#organization\",\"name\":\"Next Level Purchasing Association (NLPA)\",\"url\":\"https:\/\/www.certitrek.com\/nlpa\/\",\"logo\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/logo\/image\/\",\"url\":\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/08\/NLPA-logo-small-1.png\",\"contentUrl\":\"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/08\/NLPA-logo-small-1.png\",\"width\":149,\"height\":50,\"caption\":\"Next Level Purchasing Association (NLPA)\"},\"image\":{\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/logo\/image\/\"},\"sameAs\":[\"https:\/\/www.linkedin.com\/company\/next-level-purchasing-association\/\",\"https:\/\/www.youtube.com\/channel\/UCrNZYjcLcaNA4xMKQHEGamw\",\"https:\/\/www.facebook.com\/NextLevelPurchasing\/\",\"https:\/\/twitter.com\/nextlevelpurch\"]},{\"@type\":\"Person\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/72d094fab77892483dfa6e061cb27eaa\",\"name\":\"Galo Matagay\",\"image\":{\"@type\":\"ImageObject\",\"inLanguage\":\"en-US\",\"@id\":\"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/image\/\",\"url\":\"https:\/\/secure.gravatar.com\/avatar\/34d4be7be9c43eeb480e7e32739c2f3f?s=96&d=mm&r=g\",\"contentUrl\":\"https:\/\/secure.gravatar.com\/avatar\/34d4be7be9c43eeb480e7e32739c2f3f?s=96&d=mm&r=g\",\"caption\":\"Galo Matagay\"},\"description\":\"Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aenean consequat rutrum ipsum quis iaculis. Duis non porta purus, tincidunt tristique mi. Cras eleifend tincidunt mollis. Aliquam egestas velit vitae interdum egestas. Aliquam vel lorem egestas lectus porttitor volutpat nec sit amet enim. Nullam bibendum vestibulum imperdiet.\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Whitepaper Wednesday - Cost Savings as a Performance Priority - Next Level Purchasing Association (NLPA)","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/","og_locale":"en_US","og_type":"article","og_title":"Whitepaper Wednesday - Cost Savings as a Performance Priority - Next Level Purchasing Association (NLPA)","og_description":"Welcome back to another weekly installment of Whitepaper Wednesday here [&hellip;]","og_url":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/","og_site_name":"Next Level Purchasing Association (NLPA)","article_publisher":"https:\/\/www.facebook.com\/NextLevelPurchasing\/","article_published_time":"2009-05-13T13:48:00+00:00","article_modified_time":"2021-07-19T08:10:34+00:00","og_image":[{"width":1600,"height":1196,"url":"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/11\/nlpa-images-048.jpg","type":"image\/jpeg"}],"author":"Galo Matagay","twitter_card":"summary_large_image","twitter_creator":"@nextlevelpurch","twitter_site":"@nextlevelpurch","twitter_misc":{"Written by":"Galo Matagay","Est. reading time":"3 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/#article","isPartOf":{"@id":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/"},"author":{"name":"Galo Matagay","@id":"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/72d094fab77892483dfa6e061cb27eaa"},"headline":"Whitepaper Wednesday &#8211; Cost Savings as a Performance Priority","datePublished":"2009-05-13T13:48:00+00:00","dateModified":"2021-07-19T08:10:34+00:00","mainEntityOfPage":{"@id":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/"},"wordCount":573,"publisher":{"@id":"https:\/\/www.certitrek.com\/nlpa\/#organization"},"articleSection":["Procurement"],"inLanguage":"en-US"},{"@type":"WebPage","@id":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/","url":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/","name":"Whitepaper Wednesday - Cost Savings as a Performance Priority - Next Level Purchasing Association (NLPA)","isPartOf":{"@id":"https:\/\/www.certitrek.com\/nlpa\/#website"},"datePublished":"2009-05-13T13:48:00+00:00","dateModified":"2021-07-19T08:10:34+00:00","breadcrumb":{"@id":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/#breadcrumb"},"inLanguage":"en-US","potentialAction":[{"@type":"ReadAction","target":["https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/"]}]},{"@type":"BreadcrumbList","@id":"https:\/\/www.certitrek.com\/nlpa\/blog\/whitepaper-wednesday-cost-savings-as-a-performance-priority\/#breadcrumb","itemListElement":[{"@type":"ListItem","position":1,"name":"Home","item":"https:\/\/www.certitrek.com\/nlpa\/"},{"@type":"ListItem","position":2,"name":"Whitepaper Wednesday &#8211; Cost Savings as a Performance Priority"}]},{"@type":"WebSite","@id":"https:\/\/www.certitrek.com\/nlpa\/#website","url":"https:\/\/www.certitrek.com\/nlpa\/","name":"Next Level Purchasing Association (NLPA)","description":"The Next Level Purchasing Association","publisher":{"@id":"https:\/\/www.certitrek.com\/nlpa\/#organization"},"potentialAction":[{"@type":"SearchAction","target":{"@type":"EntryPoint","urlTemplate":"https:\/\/www.certitrek.com\/nlpa\/?s={search_term_string}"},"query-input":"required name=search_term_string"}],"inLanguage":"en-US"},{"@type":"Organization","@id":"https:\/\/www.certitrek.com\/nlpa\/#organization","name":"Next Level Purchasing Association (NLPA)","url":"https:\/\/www.certitrek.com\/nlpa\/","logo":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/logo\/image\/","url":"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/08\/NLPA-logo-small-1.png","contentUrl":"https:\/\/www.certitrek.com\/nlpa\/wp-content\/uploads\/sites\/5\/2020\/08\/NLPA-logo-small-1.png","width":149,"height":50,"caption":"Next Level Purchasing Association (NLPA)"},"image":{"@id":"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/logo\/image\/"},"sameAs":["https:\/\/www.linkedin.com\/company\/next-level-purchasing-association\/","https:\/\/www.youtube.com\/channel\/UCrNZYjcLcaNA4xMKQHEGamw","https:\/\/www.facebook.com\/NextLevelPurchasing\/","https:\/\/twitter.com\/nextlevelpurch"]},{"@type":"Person","@id":"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/72d094fab77892483dfa6e061cb27eaa","name":"Galo Matagay","image":{"@type":"ImageObject","inLanguage":"en-US","@id":"https:\/\/www.certitrek.com\/nlpa\/#\/schema\/person\/image\/","url":"https:\/\/secure.gravatar.com\/avatar\/34d4be7be9c43eeb480e7e32739c2f3f?s=96&d=mm&r=g","contentUrl":"https:\/\/secure.gravatar.com\/avatar\/34d4be7be9c43eeb480e7e32739c2f3f?s=96&d=mm&r=g","caption":"Galo Matagay"},"description":"Lorem ipsum dolor sit amet, consectetur adipiscing elit. Aenean consequat rutrum ipsum quis iaculis. Duis non porta purus, tincidunt tristique mi. Cras eleifend tincidunt mollis. Aliquam egestas velit vitae interdum egestas. Aliquam vel lorem egestas lectus porttitor volutpat nec sit amet enim. Nullam bibendum vestibulum imperdiet."}]}},"acf":[],"_links":{"self":[{"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/posts\/2653"}],"collection":[{"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/users\/12"}],"replies":[{"embeddable":true,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/comments?post=2653"}],"version-history":[{"count":3,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/posts\/2653\/revisions"}],"predecessor-version":[{"id":13380,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/posts\/2653\/revisions\/13380"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/media\/4039"}],"wp:attachment":[{"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/media?parent=2653"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/categories?post=2653"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.certitrek.com\/nlpa\/wp-json\/wp\/v2\/tags?post=2653"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}