Cost Saving Tracker

What this tool does

CM8-284 is a procurement and finance savings pipeline. Each row is one initiative: what you were paying, what you will pay, on what volume, what it costs to implement, who owns it, when the new price starts, and how far it has got towards being a number finance will accept. The tool calculates the annualised and net saving and shows where value is stuck.

It is not an improvement-idea tracker — for shop-floor kaizen ideas and participation, use the Kaizen Tracker (CM8-261). Everything runs inside this single file, with no account and no network request of any kind, so supplier names and prices never leave this computer.

Why savings trackers lose credibility

Almost every savings tracker starts well and ends up ignored, and it fails the same way. The programme reports what has been identified — a quote, a benchmark, an idea in a workshop — and identified savings are easy to generate. Meanwhile nobody reconciles them to the accounts. Twelve months later the tracker says the organisation saved a large sum and the profit and loss account says spend went up. At that point the finance director stops believing the tracker — not part of it, all of it — and the credibility is not recoverable that year. The savings genuinely delivered get buried with the ones that were not.

The defence is structural. The validated tile is the only number finance believes, so it is the only number that should appear in a board pack unqualified. Everything else — identified, negotiating, agreed, implemented — is a forecast, and this tool labels it as one. A programme that honestly reports 110,000 validated against a 250,000 target will be trusted next year; one that reports 241,000 identified as though it were delivered will not.

Baseline discipline

The baseline is what you were actually paying — the invoiced price, on the volume you actually bought, in the period immediately before the change. Not the list price, not the highest quote you received, not last year's worst outlier.

A fake baseline is the most common way savings are inflated, and it is usually not dishonest, just lazy: the list price is easy to find and the invoiced price takes an hour in the purchase ledger. If you were paying 0.42 and the list is 0.55, taking the list as your baseline turns a genuine 26% saving into a fictional 44% one, and the extra will never appear in the accounts because it was never being spent. Say in the notes where each baseline came from, so a reviewer can test it.

Two further traps: a specification change changes the thing you are buying, so the saving must be net of any cost created elsewhere; and if volume moves at the same time as price, split the effect rather than claiming the whole spend fall as a negotiation win.

Hard and soft savings, defined honestly

A hard saving reduces an invoice you were going to pay or a budget line already committed: somebody can point at a cost centre and show the number went down. A soft saving is cost avoidance — a price increase resisted, labour freed and redeployed rather than removed. Both are real work; a supplier's 8% increase negotiated down to 2% is a genuine achievement. But only hard savings appear in the accounts.

The damage comes from mixing them. Report a blended total and the first person who tests it against the ledger finds the difference and reasonably concludes the whole number is soft. So the tool separates them at row level and shows the hard share against a target you set. Near 100% hard usually means avoidance work is not being logged; below half means the tracker is measuring intentions.

The test is simple: did any budget change? If not, it is soft, however good the work was. A labour saving where nobody left is soft; a demand reduction is soft until the budget is cut.

The annualisation trap

This tool reports an annualised run-rate: what the initiative saves over a full twelve months at the stated volume. That is the right way to rank initiatives and the wrong number to put in a forecast for the current year. A price agreed in month nine does not deliver a full year's saving this year — it delivers roughly a quarter of it, and the rest next year, when it will no longer count as new. This is the largest source of disagreement between procurement and finance, and it is avoidable: both are right, they are counting different things.

The tool deliberately does not calculate an in-year figure — it has no year-end, no ledger and no phasing of volume, so any such number would be fake precision. Instead it makes the effective date a first-class field, plots validated savings by the month the price took effect, and draws the monthly share of your target as a reference line. Record the effective date as the date the first invoice carries the new price, not the date it was agreed, and reconcile month by month with finance.

Implementation cost netted off

Savings that cost money to achieve are worth less than savings that do not, and ranking on the headline figure hides that. Tooling, re-validation, first-article inspection, changeover downtime, disposal and project time all go in the implementation cost field.

The effect can be dramatic. An automation project saving 20,735 a year against a 16,900 implementation cost delivers 3,835 in its first year and its full value only in the second — not an argument against doing it, but against listing it next to a re-sourcing win that cost nothing. The top-ten chart ranks on net for that reason, and prints the arithmetic in each bar.

The funnel, and where savings leak

The funnel chart shows the annualised value at each stage. Each initiative appears once, at the stage it has reached, so read it as a map of where the money is today rather than a cumulative funnel.

The stage to watch is Agreed. An agreed price that is never implemented saves nothing at all, and it is the biggest single leak in most programmes: the negotiation is finished, the buyer has moved on, and nobody has updated the purchase order, the system price or the standard cost. Invoices keep arriving at the old price and the saving evaporates. The pipeline-at-risk tile puts that number in front of you; chase it as an administrative task, because that is what it is. The second leak is implemented but never validated: book the validation when you book the change.

Finance validation is the gate

The validated by finance tick is the only thing here that converts a forecast into a fact, and the register will not accept a status of validated without it. Validation means somebody outside procurement has compared actual spend against the baseline over a defined period, at comparable volume, and agreed the reduction is there.

Agree the method before the year starts, not when the first argument happens. Who signs? What period do they look at? How is a volume change handled, and what happens when a price falls for market reasons rather than anything you did?

Categories, and which ones repeat

The category predicts whether the saving is still there next year.

• Re-sourcing and specification change tend to stick — the part is now cheaper to make or comes from a cheaper source.
• Volume consolidation usually sticks, provided the volume does.
• Price negotiation on a commodity is often a one-year win that has to be re-won; on a rising market a negotiated hold is avoidance, not reduction.
• Process improvement sticks but is frequently soft, because freed capacity is redeployed rather than removed.
• Demand reduction is the most durable saving there is, but it is only hard once the budget is actually cut.
• Payment terms is a cash benefit, not a cost reduction. Record the financing cost avoided if you count it at all, never the cash released.

The formulas

With both unit prices blank and no one-off, the annualised saving shows a dash rather than zero — an unpriced initiative is not a saving of nothing, it is one nobody has quantified. The percentage does the same where the baseline is zero. A demand reduction entered with a new price of zero shows 100%, correctly: you are not buying the units at all.

FAQ

Should a lost initiative stay on the register? Yes. Deleting failures makes the pipeline look better than it was and destroys the evidence of how much of what you identify actually converts.

What if the volume changes after the price is agreed? Update it and note why. The saving is genuinely smaller if you buy less at the new price, and pretending otherwise fails validation.

Can one initiative have both a recurring and a one-off element? Yes — a re-source with a signing rebate. Prices and volume as normal, rebate in the one-off field.

Should the same saving be claimed in two years? No. Once a price is in the run-rate it is the new baseline. A saving is new in the year it takes effect and never again.

Saving your work

Initiatives, settings and the report header are written to this browser's local storage as you type. That storage belongs to one browser on one computer.

Treat Export .json as the real save — one file containing everything, which Import .json restores anywhere. Export CSV gives you the register for spreadsheet work. Reset asks twice, then erases everything this tool has stored.

Accuracy & disclaimer

The arithmetic is simple and the tool performs it faithfully. Everything that determines whether the answer is true sits underneath — whether the baseline was the price you were really paying, whether the volume is realistic, whether the hard-against-soft classification is honest, and whether anybody has reconciled the result.

Every money figure shown is an annualised run-rate, not in-year cash. A price effective part way through the year delivers only the remaining months of that run-rate, and this tool does not calculate the split. Only savings reconciled to the accounts and signed off by finance should be reported as delivered. This is a tracking and calculation aid — not accounting, not an audited statement, and not financial advice.