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Closing the gap between savings and results
One of procurement’s most persistent challenges is the difference between negotiated savings and realized financial performance.
Savings are reported when contracts are signed, but the savings benefits often fail to materialize when the income statement is issued. Enterprise and deal complexity has traditionally made it impossible to enforce negotiated terms through manual effort, creating a 3%-5% savings erosion across the board. But today, agentic AI can resolve the complexities of translating contract pricing into executed purchase orders and paid invoices. AI automation can detect price variances against the contract, pinpoint where the data discrepancies originated, and make necessary updates or push back on supplier escalations.
EY teams reviewed a variety of categories and found a 5% savings by preventing the leakage from contracted prices and guiding users to the existing preferred suppliers. Across the client's $2B portfolio of indirect spend, this represents a $100M opportunity that is simply falling through the cracks.
New priorities for procurement leaders
When procurement leaders design savings programs, they must keep execution and financial realization in mind from the start and treat data quality, catalog accuracy, supplier compliance, user adoption and finance alignment as core components of value delivery, not downstream administrative tasks.
Organizations that build cross-functional operating models around AI-enabled insights will see the greatest benefit because all functions can see where savings are created, where they are at risk and the interventions needed to protect them. This shifts procurement’s role from managing sourcing events to orchestrating continuous value capture across the enterprise. That shift requires stronger governance, cleaner master data, business planning integration and tools for guiding day-to-day buying behavior.
Conclusion
For consumer products companies, the next wave of procurement impact will come from connecting data, decisions and execution across the enterprise.
Traditional sourcing and negotiation will remain important, but they are no longer sufficient on their own.
Organizations that use AI to uncover hidden productivity opportunities, simplify complexity, guide buying behavior and maintain savings flow through to financial results will have a lasting advantage.
The opportunity is there to follow savings from insight to the bottom line.
In this new model, AI becomes the connective capability that enables procurement to focus on stakeholder engagement and more innovative procurement, while protecting the negotiated value and cost improvements already underway.
CJ Dungan contributed to this article.