To accurately measure cost savings in procurement, stakeholders must track both the tangible and intangible benefits delivered by their procurement activities. With the help of spend analysis, they can compare current spend patterns against historical data and pre-negotiated contracts. When aligned with procurement KPIs, cost savings can demonstrate procurement’s direct impact on the organization’s bottom line.

Direct savings can be calculated from volume discounts, lower prices, and negotiated supplier terms. Indirect savings can be calculated by taking into account reduced administrative costs, process efficiency, and other intangible benefits. Procurement software can identify cost savings more accurately by assessing strategic sourcing activities and contracts.

Recommended Reading:
List of procurement tools
What is procurement process?
What is vendor management system?
What is PO system?
Best eprocurement software in the market 2025
How to choose the best procurement software for small business?
Best vendor management tools in 2025
Procurement solutions guide
Differences between sourcing and procurement
What is the difference between procurement and purchasing?
Best strategic sourcing software tools in 2025