Introduction: How Procurement Can Unlock Cost Savings and Drive Strategic Value
In today’s economic climate, organisations are under increasing pressure to reduce costs while maintaining service quality. Rising supply chain costs, inflationary pressures, and growing regulatory requirements make effective procurement strategies more critical than ever.
To explore how businesses can optimise their procurement functions, we spoke with Kingston Yong, Manager at Trace Consultants, about the key cost-saving levers in indirect procurement, supplier negotiations, contract performance, and strategic procurement transformation.
Interview with Kingston Yong
Q: How can organisations reduce costs through indirect procurement projects?
Kingston Yong:
Indirect procurement is often overlooked, but it represents a significant cost-saving opportunity for businesses. Many organisations focus on direct spend—such as raw materials and manufacturing components—while indirect categories like facilities management, IT, professional services, travel, and marketing can account for 20-40% of total spend.
By conducting a detailed spend analysis, organisations can identify inefficiencies, consolidate suppliers, and negotiate better rates. One of our clients in the healthcare sector saved 22% on facility management costs by optimising their contract structure and moving to a performance-based pricing model.
Q: How can procurement benchmarking and supplier negotiation strategies unlock savings?
Kingston Yong:
Benchmarking is essential to understanding where an organisation’s procurement costs sit in comparison to industry standards. We often see businesses overpaying for services and materials due to legacy contracts, lack of market visibility, or underutilisation of economies of scale.
By leveraging market intelligence and procurement analytics, organisations can:
- Identify cost reduction opportunities by comparing current spend against industry benchmarks.
- Improve supplier negotiations by using competitive insights.
- Implement structured tendering processes to drive cost efficiencies.
At Trace Consultants, we have helped clients reduce supplier costs by introducing structured category management and negotiation strategies.
Q: How can organisations reduce supply chain costs without compromising service quality?
Kingston Yong:
Cost reduction must be balanced with operational efficiency. The biggest mistake companies make is focusing only on unit price reduction, which can lead to quality issues, service delays, and supply risks.
Instead, we recommend an end-to-end cost optimisation approach that includes:
- Supplier performance management – Ensuring suppliers deliver on agreed service levels to avoid hidden costs.
- Demand management – Reducing unnecessary purchases and improving forecasting accuracy.
- Process automation – Streamlining procurement processes through digital tools to cut administrative costs.
For example, we helped a retail business achieve a 15% cost reduction in packaging procurement while maintaining quality by consolidating suppliers and leveraging long-term contracts.
Q: How can Australian businesses improve contract performance and supplier management?
Kingston Yong:
A well-managed contract ensures cost predictability, performance compliance, and risk mitigation. However, many businesses lack real-time visibility into supplier performance, leading to cost overruns and operational inefficiencies.
Key steps to improving contract performance include:
- Implementing clear KPIs and SLAs to measure supplier effectiveness.
- Using contract lifecycle management (CLM) tools to track performance and compliance.
- Regular supplier reviews and renegotiations to ensure continuous value delivery.
Q: How can businesses navigate the rising costs of supply chain operations?
Kingston Yong:
Supply chain costs are increasing due to inflation, transportation expenses, and rising raw material costs. To combat these pressures, businesses should focus on:
- Strategic sourcing – Evaluating alternative suppliers to diversify risk and improve pricing.
- Supply chain collaboration – Working with suppliers to identify cost efficiencies.
- Process standardisation – Reducing variation in procurement processes to lower administrative costs.
At Trace Consultants, we recently helped a manufacturing client cut logistics costs by 20% by redesigning their supplier distribution network.
Q: How can organisations move from tactical procurement to strategic procurement?
Kingston Yong:
Many organisations still operate in a reactive, tactical procurement model, where procurement teams focus on transactional purchasing rather than strategic value creation. Moving towards strategic procurement involves:
- Developing category strategies to align procurement with business goals.
- Enhancing supplier partnerships to drive innovation and long-term cost efficiencies.
- Leveraging digital procurement tools to automate and optimise processes.
How Trace Consultants Can Help
At Trace Consultants, we specialise in helping businesses:
✅ Conduct Procurement Spend Analysis – Identifying cost-saving opportunities across indirect categories.
✅ Optimise Supplier and Contract Management – Implementing performance-driven contract strategies.
✅ Develop Procurement Benchmarking & Cost Optimisation Strategies – Aligning pricing structures with market intelligence.
✅ Enable Digital Procurement Transformation – Implementing automation and analytics for smarter decision-making.
✅ Drive Strategic Sourcing Initiatives – Reducing costs while maintaining service excellence.
With a data-driven approach and deep procurement expertise, Trace Consultants empowers organisations to unlock cost savings, improve supplier relationships, and future-proof their procurement functions.
Final Thoughts
Procurement is no longer just about cost-cutting—it’s a strategic function that impacts an organisation’s long-term profitability and supply chain resilience.
For businesses looking to reduce procurement costs, improve supplier performance, and drive operational excellence, now is the time to act.
Want to discuss how Trace Consultants can help? Get in touch today.
