Procurement teams are increasingly expected to demonstrate the tangible value they deliver to their institutions. It’s not enough to secure a lower price. The real impact is in quantifying how sourcing decisions strengthen financial stewardship, reduce risk, and improve overall institutional performance.
The E&I Economic Benefit Model™ (EBM) offers a measurable advantage. It’s a data-driven framework that allows professionals to evaluate total value (not just cost savings) across all stages of procurement. It provides a consistent way to calculate, measure, and communicate your team’s contribution in tangible terms.
Here’s how to use the Economic Benefit Model™ to understand how to calculate cost savings in procurement and demonstrate measurable results across your organization.
Procurement’s strategic influence depends on your ability to prove value clearly with the data to back it up. Bottom-line savings or discounts are easy to measure, but your indirect costs, cost avoidance, and long-term value are more difficult to quantify. Yet, you likely still get asked that question all the time: What’s the ROI for doing this? Without a structured measurement approach, it’s easy for procurement contributions (especially indirect ones) to go unnoticed.
Tracking savings also serves as a continuous improvement tool. By measuring outcomes, you can benchmark performance, identify inefficiencies, and validate the impact of your strategic sourcing decisions. Transparency here helps build credibility and trust.
Before any calculation can take place, you need a shared definition of “savings.” The Economic Benefit Model™ framework categorizes procurement benefits into three core areas of value:
Traditional calculations typically focus on price reduction but provide a limited view that overlooks other major sources of value. However, you benefit from capturing the full spectrum of the financial impact of your decisions.
How much of a difference can this make? According to Bain & Company, world-class procurement teams can reduce purchasing expenses by as much as 8% to 12%.
For higher education, developing a baseline is key to measuring costs savings in procurement to track improvements over time. The E&I Economic Benefit Model™ integrates benchmarks into the process, using validated historical and industry data to reflect a realistic cost scenario.
Establishing the right baseline is a key step in figuring out how to calculate cost savings in procurement accurately. Without it, even the best contract outcomes may not capture the total value.
Once a baseline is established, the E&I Economic Benefit Model™ quantifies value across its three pillars:
This structure captures the total value in an evidence-based model.
Not all savings are captured on an invoice. Process improvements and operational efficiencies can produce major cost avoidance benefits over time. These indirect costs are rarely included in reporting.
By leveraging E&I’s competitively solicited contracts, you eliminate the need to issue your own RFPs, saving weeks or months of administrative work. Cooperative contracts also reduce supplier management complexity and lots of paperwork while staying compliant.
Cycle times decrease. Transactions run smoothly. Administrative headaches occur less frequently. These indirect gains represent measurable value that should be included in your total savings calculations.
The next step is turning data into insight. Dashboards, scorecards, and year-end summaries help make procurement’s performance visible across campus leadership.
Common metrics to track include:
When stakeholders can clearly see how to measure cost savings in procurement, it reinforces trust and showcases your procurement team’s contribution to financial stewardship.
By identifying where savings are strongest, it becomes easier to focus on where you can have the biggest impact.
Continuous measurement using the E&I Economic Benefit Model™ then becomes a foundational part of making decisions, connecting procurement decisions with total value and serving as a way to measure improvements over time.
Procurement’s role in higher education is clearly expanding. Along with it, the expectations to deliver measurable savings and performance are expanding as well. The E&I Economic Benefit Model™ provides the structure and transparency to calculate savings accurately, demonstrate long-term value, and strengthen your financial accountability.
Ready to see the E&I Economic Benefit Model™ in action? Find your E&I representative and get a complimentary consultation to discover how your institution can calculate, measure, and maximize procurement savings.