Procurement has always been seen as a cost center. Teams are tasked with negotiating better deals, chasing discounts, and making sure suppliers deliver on time. But in 2025, procurement is no longer just about buying, it’s about generating real, measurable savings that impact the bottom line.
At Penny, we’ve seen firsthand how companies that digitize procurement decisions, not just processes unlock savings that traditional systems miss. On average, companies using Penny achieve 6.11% in direct savings and 27.5% in cost avoidance.
Let’s break down what that means and why it matters.
What Is Direct Savings in Procurement?
Direct savings are the most visible and measurable form of procurement success. It’s the difference between the supplier’s initial offer and the final accepted offer.
Example:
- Supplier’s initial quote: $100,000
- Negotiated final contract: $94,000
- Direct savings = $6,000 (6%)
Penny helps teams achieve these savings consistently by giving them visibility, benchmarking data, and automated RFQ processes that encourage competitive supplier bidding.
What Is Cost Avoidance?
Cost avoidance measures the savings you achieve by selecting a better offer compared to the average of all other offers. It reflects the smarter decisions procurement teams make when they have the right data.
Example:
- Supplier A’s accepted offer: $94,000
- Average of all other offers: $129,000
- Cost avoidance = $35,000 (27%)
This isn’t just about negotiating this is about making informed, strategic choices.
Why These Metrics Matter
Traditional procurement often focuses only on “Did we get a discount?” But direct savings and cost avoidance show the true value of smart procurement:
- They prove procurement is delivering measurable ROI.
- They highlight efficiency gains from digitization.
- They show leadership that procurement isn’t a cost it’s a value driver.
Statistic: According to Hackett Group, world-class procurement organizations deliver 22% lower operating costs and generate savings worth 9x their investment in digital tools.
How Companies Achieve These Results with Penny
So how does Penny help companies hit 6.11% in direct savings and 27.5% in cost avoidance?
- Smarter Supplier Competition
Automated RFQs encourage suppliers to compete transparently, driving better offers. - Real-Time Visibility
Penny’s dashboards allow teams to see every quote side by side, empowering smarter decisions. - Faster Cycle Times
Delays often cause companies to accept higher prices. Penny automates approvals, cutting cycle times and unlocking early-bird pricing. - Centralized Supplier Data
Teams evaluate suppliers based not just on price, but on reliability, quality, and performance. - Compliance Built In
With clear approval workflows and audit trails, Penny ensures that savings opportunities don’t get lost to maverick spend.
Real-World Example
A multinational hospitality group implemented Penny to manage its supplier network across multiple regions. Within 12 months, the company reported:
- 7.2% in direct savings on hotel supplies.
- 29% in cost avoidance through better vendor selection.
- Procurement cycle times cut in half.
The CFO noted that procurement, once seen as “back-office,” became a strategic partner in driving profitability.
Why Traditional Systems Miss These Savings
Legacy tools and spreadsheets can track transactions, but they don’t help you make smarter decisions. Without automation, visibility, and data-driven insights, procurement teams:
- Miss early payment discounts.
- Accept higher prices due to slow approvals.
- Lack benchmarks to negotiate effectively.
- Fail to measure savings beyond basic discounts.
That’s why procurement needs more than digitization, it needs intelligence.
How Penny Delivers Smarter Savings
Penny is designed to help companies unlock both direct savings and cost avoidance by:
- Automating RFQs and approvals.
- Centralizing all supplier quotes and data in one place.
- Using AI-driven insights to highlight the best offers.
- Enforcing compliance to eliminate maverick spend.
Result: Companies using Penny consistently report savings that translate directly into stronger bottom lines.
Procurement doesn’t have to be a cost center; it can be a profit generator. Book a personalized demo with Penny today and discover how much your business could be saving.
