The Cost of Not Knowing: Unraveling the Hidden Savings in Procurement
By improving procurement oversight, companies can regain control over spending and uncover significant savings
A casual conversation among four investment bankers at a conference revealed a startling discrepancy.
They were all staying at the same hotel yet paying wildly different rates for the same service.
A few years later, this observation led to the formation of Concertiv, a New York City-based outsourced procurement firm.
Leveraging group purchasing, market intelligence and procurement best practices across key spend categories including market data, technology, travel and insurance, Concertiv has helped mid-market clients punch above their weight and save substantial sums—sometimes multiple million dollars a year, says Concertiv CEO Priya Iyer.
“The problem is that CFOs and COOs of mid-market PE firms are wearing too many hats,” Iyer says. “Procurement is nobody’s full-time job—often they don’t know what programs they are eligible for or even that such outsourced group procurement programs exist.”
Centralizing Procurement Management
Many organizations don’t monitor their vendors and contracts as well as they could, Iyer says. Most of Concertiv’s clients operated without a centralized procurement management system before contacting the firm for help.
Procurement is nobody’s full-time job—often they don’t know what programs they are eligible for or even that such outsourced group procurement programs exist.
She says that many private equity firms, investment banks and hedge funds were uncertain about the full scope of their portfolio and the license and renewal terms.
In some cases, employees who had long since left the company were still paid for under these contracts.
Centralized procurement management, with proper oversight, can identify gaps and duplicative spend. As part of its Procurement-as-a-Service offering, Concertiv manages contracts, invoices, entitlements and negotiations, so their clients realize savings that had previously gone unnoticed.
Navigating Spend Management
When managing spend with vendors, many organizations don’t secure the best possible prices due to a lack of market knowledge.
Concertiv conducts a portfolio analysis for clients, identifying redundancies, gaps, market trends and opportunities to improve pricing and contract terms. Based on this data and market intelligence, Concertiv begins the renewal process 90 to 120 days in advance.
With a vendor network of over 1,000 and a deep understanding of the market, Concertiv is able to get the best products at the best terms for its clients.
“It’s about getting the best products at the best prices to meet the firms’ needs,” Iyer says.
Optimizing Procurement and Processes
In an ever-changing market landscape, the need for market intelligence has never been more important. Organizations must ensure they are providing their teams with the best tools and programs but are also being fiscally responsible.
In addition to its portfolio analysis and ongoing procurement services, Concertiv gives clients peer benchmarks, so they can compare programs and spend against their peer set. This provides the transparency organizations need to make better spend decisions but previously didn’t have access to.
For instance, recent changes in air and hotel programs, and how people travel post-COVID, have left travel policies outdated at most firms. Concertiv provides peer benchmarking and advisory services to help firms update and roll out updated policies.
“All of this is part of optimizing procurement and ensuring you have the best tools and programs at the best price,” Iyer says. “If they investigate, companies can find a lot of savings and areas where they can avoid unnecessary costs.”
Middle Market Growth is produced by the Association for Corporate Growth. To learn more about the organization and how to become a member, visit www.acg.org.