Cost savings is a measurable reduction in cost against an approved baseline for comparable demand, specification and commercial scope. Finance treatment can differ by organization.
| Area | What the record should show |
|---|---|
| Control | Define the baseline and benefit period before claiming the result. Adjust for volume, mix, currency, freight and scope changes so the comparison remains like for like. |
| Evidence | Retain baseline transactions, new terms, quantities, normalization, implementation date and finance validation where required. |
| Tradeoff | A lower unit price produces no realized saving when demand disappears or the new supplier is never used. |
When it matters
Define the baseline and benefit period before claiming the result. Adjust for volume, mix, currency, freight and scope changes so the comparison remains like for like.
Review before approval
Retain baseline transactions, new terms, quantities, normalization, implementation date and finance validation where required.
A lower unit price produces no realized saving when demand disappears or the new supplier is never used.
