The importance of relevance to the P and L Statement cannot be overstated. If you report procurement results that can’t be found on the Income Statement, your credibility will suffer greatly. In fact, as a CPO, I literally banned the word “savings” from our practice. Either a result was cost reduction, or it was cost avoidance. But never was it labeled by the vague term “savings.”
To have the best chance of credibility with your internal clients, you need to build a framework and tracking system that is P & L relevant – and that means tracking and reporting only cost reduction from operating costs.
This framework is one of the foundations for a credible approach to reporting the results from the efforts of your teams.
More in my next posting.
(Note: portions of this blog series are based on the author’s new book “Next Level Supply Management Excellence” – a sequel to the bestselling book “Straight to the Bottom Line® )
SC
MR
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About the Author
Robert A Rudzki, SCMR Contributing Blogger
Robert A. Rudzki is a former Fortune 500 Senior Vice President & Chief Procurement Officer, who is now President of Greybeard Advisors LLC, a leading provider of advisory services for procurement transformation, strategic sourcing, and supply chain management. Bob is also the author of several leading business books including the supply management best-seller “Straight to the Bottom Line®”, its highly-endorsed sequel “Next Level Supply Management Excellence,” and the leadership book “Beat the Odds: Avoid Corporate Death & Build a Resilient Enterprise.” You can reach him through his firm’s website: www.greybeardadvisors.com
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