I hope that you have enjoyed the article “Reasons Realized Savings Falls Short, Part I.”
You probably know me as an advocate for procurement. If so, you probably were surprised when the first reason I cited in the article cast blame on procurement for Realized Savings being dwarfed by Negotiated Savings.
Well, before you get too upset, here’s the thing. You should realize that Reason #1 will be the only reason where blame falls squarely on procurement. The reason there are multiple reasons in the first place is that – contrary to popular belief in non-procurement circles – procurement is not always to blame when Realized Savings falls short. Procurement was defended in Reason #2 and will be further defended in Part II of this series.
But, as part of defending procurement, it is important for me to also encourage procurement professionals to do the best job possible. It is important for me to encourage procurement professionals to hold themselves accountable to a high standard of business contribution and credibility. So, when blame is justified, we need to take our knocks and learn from it.
If you don’t want to be blamed for savings actuals not meeting savings estimates, then you need to do everything ethical in your power to ensure that your job was done right. And that means learning everything you need to learn about your organization’s requirements and the markets in order to contract for prices that are realistically going to be the prices billed. And that means managing the supplier and the contract so that nothing gets snuck in.
Do a good job. Take personal responsibility to realize all of the savings you’ve negotiated. But, if there is going to be a difference, make sure it isn’t your fault.