The 18% Cost Savings You’re Leaving on the Table – CPSCM™ Insights
Article by Omid G
Across industries, procurement professionals pride themselves on securing savings from suppliers year after year. Yet there’s a hidden opportunity that often goes untapped: an average of 18% additional cost savings available in every single negotiation—if you know where to look.
The Traditional Approach – And Its Limits
Historically, cost savings have been driven by supplier profit compression. We negotiate harder, squeeze margins, and push for lower prices. This approach demands skill, persistence, and often earns procurement teams respect within the profession.
But here’s the truth:
This method rarely removes actual costs from the supply chain. Instead, it simply shifts costs from one point to another—a parasitic saving that doesn’t benefit the system as a whole.
And perhaps most surprising—this isn’t where the biggest savings are found.
Where the Real Savings Hides
Every purchase has a lifecycle that starts long before procurement is typically involved—with an end user who has something specific in mind. It’s here, at the design and specification stage, that hidden costs creep in.
Two common conflicts of interest drive these inefficiencies:
Reward for Designing Over Selecting
End users are often celebrated for creating something from scratch, not for choosing proven solutions from existing supplier offerings. Yet, in over 99% of cases, a new design isn’t necessary.Focusing on What to Buy Instead of What to Achieve
End users tend to define the “thing” they want rather than the outcome they’re aiming for—leading to over-specified, over-customized, and over-priced solutions.
This is where the 18% average savings lies—not in bidding early, but in analyzing and redesigning specifications for cost efficiency. These savings are in addition to whatever you negotiate afterward.
The Right Early Engagement
When procurement engages early, the goal shouldn’t be rushing to tender. Instead, focus on:
Understanding the desired outcomes in measurable terms.
Building a strategy to acquire performance results, not just goods or services.
Removing, standardizing, or simplifying any requirement in the SOW/spec that doesn’t contribute to the intended outcomes.
Your Unexpected Best Partner: Suppliers
Ironically, the same suppliers you’ve been battling for margin are often your best allies here. Why? Because suppliers generally dislike excessive customization—it increases complexity, risk, and cost.
When you dictate exact processes or designs, suppliers often shift risk and liability back to you, while building the cost of your custom requirements into the price. The dreaded phrase “Failure to comply may result in bid disqualification” forces them to follow inefficient instructions that can add unnecessary costs—on average, about 18%.
A Real-World Example
The US Army once maintained a rigid Statement of Work (SOW) for janitorial services—specifying staffing levels, shift patterns, cleaning chemicals, and detailed procedures. It worked, but it wasn’t cost-efficient.
When the Army switched to a performance-based RFP—measuring outcomes instead of prescribing methods—suppliers were free to propose their own solutions. The result? A 50% cost reduction, simply because the suppliers knew far better how to achieve the desired results.
This same pattern repeats across organizations every day.
Elevating the Profession
Shifting focus from what the end user wants to buy to what they want to accomplish transforms procurement’s role. It enables:
Significant cost savings beyond negotiation
Better supplier relationships
Reduced operational risk
Streamlined, standardized solutions
The CPSCM™ Program teaches exactly how to implement this approach—unlocking that hidden 18% and more. Most organizations aren’t achieving this today, which means the opportunity is still wide open.
It’s time to stop just getting better at what we’ve always done—and start doing it differently.