Procurement Glossary
Savings types: Classification and control of savings in Procurement
November 19, 2025
Savings types form the basis for a systematic classification and evaluation of savings in procurement. They enable purchasing organizations to categorize, measure and strategically manage different types of cost savings. Find out below which savings types exist, how they are methodically recorded and what significance they have for modern procurement controlling.
Key Facts
- Savings types distinguish between hard and soft savings as well as one-off and recurring effects
- Systematic classification enables precise performance measurement and reporting in Procurement
- Different categories such as price, volume and process savings require different valuation approaches
- Standardized savings definitions create transparency and comparability between business areas
- The documentation of savings types is essential for the validation and sustainability of savings
Contents
Definition: Savings types
Savings types refer to the systematic categorization of different types of cost savings that can be realized through procurement activities.
Basic classification
The main distinction is between hard and soft savings. Hard savings are directly measurable cost savings that are immediately reflected in the income statement. Soft savings include cost avoidance and qualitative improvements that are more difficult to quantify.
- Direct price reductions and discounts
- Cost avoidance through specification changes
- Process optimization with cost effect
Time dimension
Another important distinction concerns the temporal effect of the savings. One-off savings only have an effect over a certain period of time, while recurring savings generate continuous cost benefits.
Importance of savings types in Procurement
The structured recording of different types of savings enables purchasing organizations to measure their performance precisely and communicate it to management. It forms the basis for purchasing controlling and strategic decisions.
Methods and procedures
The systematic recording and evaluation of savings types requires structured methods and clear processes for identifying, quantifying and validating savings.
Baseline definition and reference prices
The basis of every savings calculation is the definition of a reliable baseline. This includes historical prices, market prices or budgeted costs as a reference point. Savings cannot be validly measured without a clear baseline definition.
- Historical average prices of the last 12 months
- Market prices of comparable products or services
- Budgeted or calculated target costs
Categorization and evaluation logic
Different types of savings require different valuation approaches. Price negotiations lead to direct price savings, while bundling effects require more complex calculations. The cost-benefit analysis helps to evaluate soft savings.
Validation and documentation
Each savings category requires specific validation mechanisms. Hard savings are confirmed through invoice comparisons, soft savings through expert estimates and plausibility checks. Seamless documentation ensures the traceability and auditability of savings.
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Key figures for managing savings types
The effective management of different types of savings requires specific key figures that measure and evaluate both the quantity and the quality of the savings realized.
Savings rate and degree of realization
The savings rate measures the share of savings in the total purchasing volume and enables benchmarking between categories and time periods. The realization rate shows what proportion of the planned savings has actually been achieved.
- Hard savings rate: Direct cost savings / purchasing volume
- Soft savings rate: cost avoidance / total costs
- Degree of realization: Actual savings / Planned savings
Quality indicators and validation
The quality of savings recording is measured by validation rates and audit results. These key figures show how reliably and verifiably the various savings types are documented. Procurement controlling uses these metrics for continuous improvement.
Sustainability and recurring effects
The share of recurring savings in total savings shows the sustainability of the procurement strategy. Savings persistence metrics measure how long savings actually last and whether they are eroded by inflation or other factors.
Risk factors and controls for savings types
The recognition and measurement of savings types entails various risks that must be minimized through suitable control mechanisms and governance structures.
Double counting and overlaps
A common risk is the multiple reporting of the same savings under different categories. This can lead to inflated savings reports and jeopardize the credibility of purchasing. Clear delimitation criteria and central coordination are essential.
Baseline manipulation and unrealistic reference values
The temptation to artificially increase baselines in order to report higher savings represents a considerable risk. Independent validation and standardized pricing mechanisms create transparency and objectivity.
- External market price validation
- Historical data analysis over several years
- Peer review processes for savings calculations
Sustainability and realization
Not all reported savings are actually realized or are sustainable. Soft savings and one-off effects in particular can prove to be less stable than originally assumed. Regular target/actual comparisons and tracking are necessary.
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Practical example
An automotive supplier implements a systematic savings classification system for its global procurement. The company defines five main categories: Price savings through negotiation, volume savings through bundling, specification savings through design-to-cost, process savings through digitalization and supplier savings through consolidation. Each category is given specific evaluation criteria and validation processes. After one year, the system shows 12% hard savings and 8% soft savings, with 65% of the savings validated as sustainable.
- Standardized categories create transparency
- Specific validation increases credibility
- Regular review ensures sustainability
Current developments and effects
Digitalization and the use of artificial intelligence are changing the way savings types are identified, measured and managed. Modern technologies enable more precise analyses and automated processes.
Digital savings tracking systems
Modern procurement platforms integrate automated savings capture with real-time dashboards. These systems can link various data sources and continuously identify potential savings. AI-based algorithms recognize patterns and suggest optimal savings categories.
Advanced analytics and predictive savings
Advanced analytics enable the prediction of future savings potential based on historical data and market trends. Machine learning models analyze complex relationships between different types of savings and identify previously undiscovered optimization opportunities.
Sustainability as a new savings dimension
Environmental and sustainability aspects are increasingly being viewed as a savings category in their own right. CO2 savings, resource efficiency and circular economy approaches are expanding the traditional understanding of cost savings to include environmental and social dimensions.
Conclusion
Savings types are an indispensable tool for the systematic recording and management of savings in modern procurement. The structured classification enables precise performance measurement, increases transparency for management and creates the basis for data-based decisions. Successful implementation requires clear definitions, robust validation processes and continuous further development of the methods. Digitalization opens up new opportunities for automated collection and advanced analytics, while sustainability is gaining importance as an additional dimension.
FAQ
What is the difference between hard and soft savings?
Hard savings are directly measurable cost savings that are immediately reflected in the income statement, such as price reductions or discounts. Soft savings include cost avoidance and qualitative improvements that are more difficult to quantify but still create economic value.
How are savings types correctly measured and validated?
Measurement requires a clear baseline definition as a reference point, standardized calculation methods for each category and independent validation processes. Hard savings are confirmed through invoice comparisons, soft savings through expert estimates and plausibility checks with regular audits.
What role do savings types play in purchasing controlling?
Savings types form the foundation for performance measurement and reporting in Procurement. They enable precise performance measurement, benchmarking between categories and time periods as well as the strategic management of procurement activities through data-based decisions.
How can double counting be avoided for different types of savings?
Double counting is avoided through clear demarcation criteria between the categories, central coordination of savings recording and systematic review processes. Each saving should be clearly assigned to a category and only recorded once, with transparent documentation of the allocation logic.
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