{"id":4333,"date":"2020-12-07T17:33:06","date_gmt":"2020-12-07T12:03:06","guid":{"rendered":"https:\/\/stagingwww.zycus.com\/savings-target-management-an-essential-guide-for-procurement-savings"},"modified":"2025-12-15T09:56:57","modified_gmt":"2025-12-15T09:56:57","slug":"savings-target-management-an-essential-guide-for-procurement-savings","status":"publish","type":"post","link":"https:\/\/dev.zycus.com\/freshz\/blog\/financial-savings-management\/savings-target-management-an-essential-guide-for-procurement-savings","title":{"rendered":"Savings Target Management &#8211; An essential guide for procurement savings"},"content":{"rendered":"<p>Savings target management is the need of the hour. The golden KPI for all procurement teams is savings. Savings reflect not only bottom-line results and improves profitability but also shows operational and strategic efficiency.<\/p>\r\n<p><em>When an organization \u2018A\u2019 saves 15% of costs vs. \u2018B\u2019 that saves 25% cost over the previous year, it&#8217;s usually the company B\u2019s of the world that defines lean process flows standards.<\/em><\/p>\r\n<p>Savings is a journey, not an endpoint. Therefore, it starts with careful planning and analyzing all available data points. Additionally, saving objectives need to be carefully set after analyzing past spend across categories, baseline, profit, and revenue targets, and other external factors.<\/p>\r\n<h2><strong><b>Savings Targets- Embarking the Sourcing Journey<\/b><\/strong><\/h2>\r\n<p>The starting point of any journey is setting the itinerary or, as in business terms &#8211; the scope and objective of a particular savings project. Therefore, like every traveler, scanning the map for intended checkpoints, organizations need to map internal units. Therefore, these units will serve as parameters to define the savings goals. Some examples are &#8211;<\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td width=\"236\"><strong><b>Category<\/b><\/strong><\/td>\r\n<td width=\"236\"><strong><b>Division<\/b><\/strong><\/td>\r\n<td width=\"236\"><strong><b>Head<\/b><\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"236\">Logistics<\/td>\r\n<td width=\"236\">South Asia<\/td>\r\n<td width=\"236\">Category manager<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<p>Here\u2019s the tricky part, choosing the right vehicle to reach the goal. Selected parameters have to work in synergy (combination) to achieve real savings.<\/p>\r\n<p>Here is an example &#8211;<\/p>\r\n<p><img fetchpriority=\"high\" decoding=\"async\" class=\"aligncenter\" src=\"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2020\/12\/Picture1-1.webp\" alt=\"Savings\" width=\"1554\" height=\"521\" \/><\/p>\r\n<p><span data-preserver-spaces=\"true\">Each unit has a combination of targets to be achieved in the set parameters. Some other key factors for setting savings targets are-<\/span><\/p>\r\n<ul>\r\n<li>Frequency of targets &#8211; Monthly, Quarterly, and Yearly<\/li>\r\n<li>Type of savings targets &#8211; Potential, Realized, Negotiated, and Actual<\/li>\r\n<li>Saving stages<\/li>\r\n<\/ul>\r\n<p>Organizations need flexibility and agility to model such savings and link them to the overall target. Hence, it requires advanced savings target management.<\/p>\r\n<h2><strong><b>\u201cTracking\u201d towards the summit: Savings Target Reporting<\/b><\/strong><\/h2>\r\n<p>Every mountain scaler will tell you the top of the mountain is alluring, but it is essential to keep looking behind to check the tracks; the same goes for achieving saving goals. Organizations need to keep a check on performance, identify shortfalls, and correct course whenever required.<\/p>\r\n<p>The internal stakeholders have to cover various touch-points and need visibility into all relevant variables. Who are these stakeholders?<\/p>\r\n<p><strong><b>Stakeholders and KPI to track<\/b><\/strong><\/p>\r\n<table>\r\n<tbody>\r\n<tr>\r\n<td width=\"236\"><strong><b>C-suite<\/b><\/strong><\/td>\r\n<td width=\"236\"><strong><b>Divisional Heads<\/b><\/strong><\/td>\r\n<td width=\"236\"><strong><b>Category Managers<\/b><\/strong><\/td>\r\n<\/tr>\r\n<tr>\r\n<td width=\"236\">Overall savings<\/td>\r\n<td width=\"236\">Overall Divisional savings (Geo, BU, etc)<\/td>\r\n<td width=\"236\">Category and commodity savings<\/td>\r\n<\/tr>\r\n<\/tbody>\r\n<\/table>\r\n<h2><strong>The important aspects of tracking are:<\/strong><\/h2>\r\n<h3><strong><span data-preserver-spaces=\"true\">Savings across stages &#8211; <\/span><\/strong><\/h3>\r\n<p><span data-preserver-spaces=\"true\">Since savings are set across stages among projects, it is essential to have full visibility into gaps and shortfalls. Therefore category managers need to track this diligently. Furthermore, this will ensure that savings are translated from previous stages to the next without any value loss. Therefore, visual and intuitive bar graphs can help to map this.<\/span><\/p>\r\n<p><img decoding=\"async\" class=\"alignnone\" src=\"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2020\/12\/Picture4.webp\" alt=\"Savings\" width=\"1262\" height=\"541\" \/><\/p>\r\n<p><em>In figure 1, stages are represented by bars. Blue shows forecast savings while the Green part of the bar shows the actual savings against the yellow line, signifying the target. For example- In stage 1, the target is ~$2319 vs. $1987 real savings.<\/em><\/p>\r\n<h3><strong><span data-preserver-spaces=\"true\">Savings target mix &#8211;<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0<\/span><\/h3>\r\n<p><span data-preserver-spaces=\"true\">The combinations of parameters define essential strengths; various heads need to have a holistic view of these combinations\u2014Division x Category, Category x Heads, Head x Division.\u00a0<\/span><\/p>\r\n<p>Therefore, by using tabular 2&#215;2 matrix, this indicator can be easily mapped.<\/p>\r\n<p><img decoding=\"async\" class=\"alignnone\" src=\"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2020\/12\/Picture3.webp\" alt=\"Savings\" width=\"1264\" height=\"568\" \/><\/p>\r\n<p><em>In figure 2, on the left, all divisions are listed vertically, and commodities are listed horizontally. For example- In West Aliya, the value of the savings is $2.265 million for commodity 2. Also, the percentage figure in brackets shows the progress as % of the savings target for the particular combination.<\/em><\/p>\r\n<h3><strong><span data-preserver-spaces=\"true\">Past trends &#8211;<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0<\/span><\/h3>\r\n<p><span data-preserver-spaces=\"true\">The best benchmark is past year&#8217;s results because this benchmark normalizes all seasonality a specific business goes through. All users need to compare past trends with existing results at a point in time. Hence, this is essential to identify gaps and take corrective action.<\/span><\/p>\r\n<p><span data-preserver-spaces=\"true\">Therefore, comparative bar graphs can help map this indicator.\u00a0<\/span><\/p>\r\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone\" src=\"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2020\/12\/Picture2.webp\" alt=\"Savings\" width=\"1259\" height=\"550\" \/><\/p>\r\n<p><em>Figure 3, Financial year is chosen from the drop-down, is displayed in the cart and current year savings value month wise. The cart displays forecast, actual savings, and savings targets in blue, green, and yellow lines. For example- July 2020 real savings exceed 2019 real savings.<\/em><\/p>\r\n<p>Saving target management is an essential discipline to ensure savings goals are met. Stakeholders need strategic bandwidth as well as technological support to master this.<\/p>\r\n<p>Zycus iSave comprehensive savings target management supports the flexibility to create targets for various combinations of parameters and has granular insight into real-time progress.<\/p>\r\n\r\n<p class=\"wp-block-paragraph\"><strong>Related Read:<\/strong><\/p>\r\n<ol>\r\n<li><a href=\"https:\/\/dev.zycus.com\/freshz\/blog\/financial-savings-management\/savings-target-management-an-essential-guide-for-procurement-savings\">Blog &#8211; Savings Target Management \u2013 An essential guide for procurement savings<\/a><\/li>\r\n<li><a href=\"https:\/\/dev.zycus.com\/freshz\/blog\/spend-analysis\/realizing-savings-in-indirect-spend-a-guide-for-procurement-teams\">Blog &#8211; Realizing Savings in Indirect Spend: A Guide for Procurement Teams<\/a><\/li>\r\n<li><a href=\"https:\/\/dev.zycus.com\/freshz\/blog\/procurement-technology\/evolution-of-the-chief-procurement-officer-from-cost-control-to-value-creation\">Evolution of the Chief Procurement Officer: From Cost Control to Value Creation<\/a><\/li>\r\n<li><a href=\"https:\/\/dev.zycus.com\/freshz\/knowledge-hub\/whitepapers\/5-ways-the-oil-and-gas-industry-can-transform-procurement-to-boost-savings-and-profits\">White Paper &#8211; 5 Ways the Oil and Gas Industry can Boost Savings and Profits<\/a><\/li>\r\n<li><a href=\"https:\/\/dev.zycus.com\/freshz\/knowledge-hub\/ebooks\/procurements-cost-savings-playbook-an-executives-guide-to-sourcing-savings\">eBook &#8211; Procurement\u2019s Cost Savings Playbook: An Executive\u2019s Guide to Sourcing Savings<\/a><\/li>\r\n<\/ol>\r\n","protected":false},"excerpt":{"rendered":"<p>Savings target management is the need of the hour. The golden KPI for all procurement teams is savings. Savings reflect not only bottom-line results and improves profitability but also shows operational and strategic efficiency. When an organization \u2018A\u2019 saves 15% of costs vs. \u2018B\u2019 that saves 25% cost over the previous year, it&#8217;s usually the [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":101607,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"site-sidebar-layout":"default","site-content-layout":"default","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"default","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[1940],"tags":[1355,773,1906,1009,361],"ppma_author":[170],"class_list":["post-4333","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-financial-savings-management","tag-procurement-savings","tag-savings-management","tag-savings-target-management","tag-savings-tracker","tag-zycus"],"acf":[],"authors":[{"term_id":170,"user_id":0,"is_guest":1,"slug":"zycus-inc","display_name":"Zycus","avatar_url":{"url":"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2025\/02\/zycus-author.png","url2x":"https:\/\/dev.zycus.com\/freshz\/wp-content\/uploads\/2025\/02\/zycus-author.png"},"author_category":"0","last_name":"Agentic Procurement Platform","first_name":"Zycus","job_title":"","user_url":"https:\/\/dev.zycus.com\/freshz","description":"Zycus is an Agentic Procurement Platform that is redefining procurement from Source-to-Pay to Intake-to-Outcomes. Its unified platform combines native Intake, agentic AI, and an end-to-end S2P core to help enterprises drive real procurement outcomes \u2014 not just transactions. Recognized by Gartner, Forrester, IDC, and customers worldwide, Zycus is shaping the next generation of procurement with the Merlin Agentic AI Platform."}],"_links":{"self":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/posts\/4333","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/comments?post=4333"}],"version-history":[{"count":0,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/posts\/4333\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/media\/101607"}],"wp:attachment":[{"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/media?parent=4333"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/categories?post=4333"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/tags?post=4333"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/dev.zycus.com\/freshz\/wp-json\/wp\/v2\/ppma_author?post=4333"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}