Why Procurement’s Obsession With Savings Is Killing Strategic Value

Procurement departments have been stuck in the same pattern for years. They chase savings, present slide decks filled with cost reductions, and wait for recognition that never comes. Meanwhile, the business views them as the cost police, not strategic partners.

A recent post on social media sparked a heated discussion about this exact problem. Celia Sgar, an SRM and vendor management expert, made a bold statement: savings-only procurement is dead. The future belongs to Supplier Relationship Management (SRM).

Her challenge was simple. Prove her wrong.

The responses revealed something important. Procurement professionals know the savings-focused model is broken. But changing it requires confronting uncomfortable truths about how the function operates and what leadership actually values.

The Savings Trap

For 16 years, the same refrain has echoed through procurement departments: “We want procurement to be seen as strategic.” Yet the focus remains locked on one metric. Savings.

Savings look impressive on slides. They are easy to measure, simple to communicate, and politically safe. But they do not build influence, trust, or long-term value.

Annalisha Noel cut straight to the point. Savings-only procurement is not just dead. It is a liability. Savings are the result of good strategy, not the goal itself.

The response was clear. Savings are the outcome, not the mission. Strategy is what keeps the lights on next year too.

This distinction matters more than most procurement teams realize. When you optimize for savings alone, you create a race to the bottom. Suppliers respond by cutting corners, reducing quality, or withdrawing innovation. The relationship becomes transactional and adversarial.

Mark B. Logan highlighted the fundamental confusion. Focusing on price alone is penny wise and pound foolish. There is a big difference between prices, costs, and total cost of ownership. There is an even bigger difference between those metrics and best value or long-term strategic partnerships.

What SRM Actually Delivers

SRM takes a different approach. Instead of treating all suppliers the same, you segment them. You focus on the 20% that matter most. You create real governance through quarterly reviews, not just contract renewals. You measure value, innovation, and risk, not just discounts. You build partnerships where both sides grow.

Rashid Ali Khan provided a framework for understanding the shift. Strategic SRM reframes the conversation from transactions to partnerships. It elevates key suppliers into long-term collaborators who co-create efficiency and innovation. It measures success through resilience, responsiveness, and shared margin improvement. It embeds structured reviews that drive accountability, agility, and mutual trust.

Procurement excellence today is not defined by how much cost you remove. It is defined by how much value you create and sustain across the value chain.

Christophe Dupas added critical context. Procurement is a strategic function. Without that strategic focus, you are left with tactical purchasing and procure-to-pay management. The procurement role is to contribute to margin enhancement through cost management and to bring value through innovation, sustainability, and other levers.

Everything should be embedded in an SRM framework. But there is a prerequisite. Suppliers must be assessed and monitored properly on all parameters. You cannot improve what you cannot measure. You cannot build anything with suppliers if you do not measure them.

The observation from the field is telling. Suppliers completely change their behavior once they understand how they are being measured, not just on cost, but on innovation, risk, and partnership. That is when the relationship really starts to grow. SRM gives both sides the clarity to improve together.

The Mindset Problem

Karima Z. voiced the frustration many CPOs face. Every CPO is told they need to prove they can impact finances to build their function as strategic. This old mindset is not changing because many think savings is the only way, or at least the biggest part.

The pressure is real. Every CPO still needs to show the money. But savings should be the consequence of strong supplier partnerships, not the whole story. If you only chase discounts, you will always be stuck in the same box.

The hardest part is not building the SRM framework. The hardest part is getting people to use it the right way. The mindset shift does not come from templates. It comes from daily conversations with suppliers that build trust over time.

Sharad Nagaich raised another dimension of the problem. User experience outside of source-to-pay processes gets ignored. After HR, procurement is the most used process in an enterprise. According to an Ardent Partners study from 2023, only 10% of CPOs think procurement tech drives great value.

Two main reasons explain this failure. Low user adoption and compliance. Misalignment between processes and systems in an evolving policy and procedures environment. If people do not use it, it is a complete waste of time and money.

The Long Game vs The Short Game

Connor Jacobs summarized the core tension. Savings keep the lights on, but SRM decides who wins long term. Most teams still chase short-term wins. That is why procurement keeps fighting for influence instead of owning it.

Omer Sasson framed it even more starkly. Savings make you look good this quarter. SRM makes you valuable for the next decade. Two very different aspects.

The truth is simple. Savings make you look good today, but SRM keeps you relevant for years. Big difference.

Aiman Nadeem took it further. Chasing savings alone makes procurement a glorified accountant while the real game is happening in partnerships everyone ignores.

This criticism stings because it is accurate. When procurement focuses exclusively on cost reduction, it positions itself as a support function, not a strategic partner. The conversations happen at the tactical level, not in the boardroom.

Farzaneh Najafi pointed out what SRM delivers at minimum. It drives cost savings. But in the broader scope, effective SRM enhances the firm’s reputation and strengthens its competitive advantage.

When SRM is done right, savings just happen naturally. But the real win is the trust, reputation, and influence it builds across the business.

What True Partnership Looks Like

Aaron Bodley emphasized the path to sustainable savings. True sustainable savings are achieved through building meaningful partnerships. This is enabled through effective SRM.

The key insight is clear. Partnerships create the savings, not the other way around. That is the power of real SRM.

This reversal of causality changes everything. Instead of demanding savings and hoping for partnership, you build partnerships and generate savings as a natural consequence.

Udenigwe A. highlighted what strong supplier relationships unlock. Resilience, innovation, and strategic growth. Savings may win in the short term, but relationships deliver long-term value.

The timeline matters. Savings fade fast, but strong supplier relationships keep creating value long after the contract is signed.

KUNAL KUMAR GHOSH used a vivid metaphor. Focusing only on savings is like measuring the ocean with a teaspoon. SRM turns procurement into a powerhouse of trust, innovation, and long-term value.

The metaphor resonates. SRM gives depth to procurement. It provides the structure where real partnerships, ideas, and impact start to grow.

The Implementation Challenge

Olga Catena described the aspirational version. Supplier Relationship Management opens the door to long-lasting partnerships where trust, innovation, and mutual growth take center stage, making procurement a genuine strategic ally.

This sounds great in theory. But implementation is where most organizations struggle.

You need to segment suppliers based on strategic importance, not just spend. You need to establish governance structures that create regular touchpoints and accountability. You need to measure suppliers on multiple dimensions, not just price. You need to train your procurement team to have strategic conversations, not just negotiate discounts. You need to align internal stakeholders around the value of supplier relationships.

Each of these steps requires organizational change. Change is hard. Change is slow. Change meets resistance.

Most procurement organizations do not have the patience or political capital to see it through. So they revert to what is easy and measurable. Savings.

The Financial Pressure

The pressure to deliver financial results is real. CFOs need to see numbers. Boards expect cost management. Investors demand efficiency.

But there is a difference between delivering financial results and optimizing only for short-term savings. The best procurement organizations do both. They deliver cost improvements through strategic supplier relationships that generate innovation, reduce risk, and create competitive advantage.

The problem is not that savings matter. The problem is that savings have become the only thing that matters. When that happens, you lose sight of everything else procurement can deliver.

Strategic procurement contributes to margin enhancement through multiple levers. Cost management is one. Innovation from suppliers is another. Risk mitigation is a third. Sustainability and brand reputation are fourth and fifth. Speed to market, quality improvements, and supply chain resilience add more value.

None of these benefits show up in a simple savings report. But they show up in business outcomes.

The Path Forward

The conversation reveals a consensus. Procurement needs to evolve beyond savings-only thinking. SRM provides the framework for that evolution.

But consensus and action are different things. Most organizations will continue optimizing for what gets measured and rewarded. If leadership only asks about savings, procurement will only deliver savings.

The change has to come from the top. CPOs need to educate their executive teams about the full value procurement can deliver. They need to establish metrics that capture innovation, risk reduction, and strategic partnership value. They need to build the business case for investing in SRM capabilities.

This requires courage. It requires political skill. It requires patience.

But the alternative is worse. Procurement stuck as the cost police, fighting for relevance, unable to influence business strategy.

You have a choice. Continue chasing quarterly savings targets and hope for a seat at the strategic table. Or build the supplier relationships that make you indispensable to the business.

The future belongs to procurement teams that choose partnerships over transactions, long-term value over short-term wins, and strategic influence over tactical cost cutting.

The question is whether your organization has the courage to make that choice.

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