Raw Material Procurement Savings: Measurement and Strategy

Procurement teams across metals and mining operate in one of the most volatile and complex environments in the industrial economy. Raw materials such as nickel, copper, lithium, and ferroalloys move through intense price cycles shaped by supply shocks, energy costs, and shifting trade policies. In this environment, every sourcing decision directly affects competitiveness and cost structure.

Boards and CFOs are acutely aware of this. They increasingly expect procurement performance to be measurable and auditable, not simply reported as anecdotal “savings.” Yet, many organisations still rely on outdated tools and methods that struggle to show where value was actually created.

This is where the conversation around procurement measurement has fundamentally changed. It is no longer enough to show a lower price. What matters is whether procurement truly outperformed the market, managed risk, and delivered resilience.

This article outlines why measurement has become essential, why traditional methods fall short, and how digital infrastructure, like the Metalshub Procurement Solution, enables teams to measure and report results accurately and confidently.

Procurement sits at the intersection of finance, operations, and sustainability. Every purchase decision links directly to margins, compliance, and risk exposure. As a result, procurement leaders face increasing scrutiny from three directions:

1. Boards and CFOs expect transparent, auditable proof that procurement savings are real and repeatable.
2. Regulators are expanding disclosure requirements under frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
3. Markets demand evidence of cost control and supply resilience in an environment of sustained volatility.

In practice, these pressures mean that procurement performance must be expressed in quantifiable, verifiable terms, supported by data rather than assumptions. A buyer who claims success because the new price is 10% lower than last year’s may appear efficient, but if the global index fell 15 % in the same period, the result actually lags market performance.

Procurement measurement, therefore, is not an administrative exercise. It is the foundation of financial integrity and strategic credibility.

Many procurement teams still rely on invoice-to-invoice comparisons or budget variance tracking to demonstrate savings. These methods are simple, but they rarely hold up under audit.

Three limitations stand out:

• Distorted baselines: Comparing prices against outdated budgets or last transactions fails to capture market movements. The result can make procurement appear successful when it merely followed the market trend.
• Inconsistent assumptions: When teams manually adjust for freight, quality, or currency, the outcome depends on subjective estimates that differ from buyer to buyer.
• Lack of auditability: Spreadsheets and email trails make it difficult to reconstruct how an award decision was made or how savings were calculated.

These weaknesses undermine confidence in reported results. Without a transparent baseline or consistent method, stakeholders cannot distinguish genuine procurement performance from favourable market timing.

To move beyond assumptions, procurement teams need a structured framework that defines how savings are measured and which baselines are used.

Our whitepaper How to Measure Cost Savings in Raw Material Procurement introduces three core KPIs that form the foundation of this framework:

• Negotiation Savings: The improvement achieved between the first supplier offer and the final awarded price under comparable terms
• Purchase Price Variance (PPV): The difference between the awarded price and a defined baseline, such as a market index, predetermined budget, or last transaction.
• Supplier Choice Savings: The premium or savings achieved by awarding to an alternative supplier compared to the next-best offer.

Each KPI answers a specific question about procurement performance:

• Did the negotiation process create measurable value?
• Did the outcome outperform the market or internal benchmarks?
• Did supplier selection enhance competitiveness or resilience?

The strongest measurement systems combine these metrics to create a balanced view of savings across categories.

Metrics alone are not enough. Their credibility depends on how accurately they are calculated. For example, PPV versus market index is widely regarded as the most reliable indicator of procurement performance because it isolates the procurement effect from the market effect. However, it only works if prices are normalised for comparable terms.

That means adjusting for:

• Currency using spot or forward exchange rates,
• Incoterms by adding or removing freight costs,
• Payment terms using the company’s weighted average cost of capital (WACC),
• Quality specifications, such as nickel content or lithium purity, and
• Duties or local charges where applicable.

Without these adjustments, even the best KPIs can mislead. Two offers denominated in different currencies or quoted on different delivery terms cannot be compared directly.

This process of normalisation is where traditional spreadsheets reach their limits. It is time-consuming, prone to error, and difficult to audit. For most teams, the challenge is not defining KPIs but collecting, normalising, and maintaining reliable data to support them. That is where a digital platform like Metalshub can be of significant value for a procurement team; and it is not purely cost savings.

While savings remain the most visible indicator of procurement impact, they are only part of the story. Mature organisations track a broader set of KPIs to ensure procurement is competitive, compliant, and resilient.

These include:

• Supplier engagement metrics, such as the number of offers per tender and the reaction-to-invite ratio, which show how effectively competition is maintained.
• Governance and compliance indicators, including time-to-award, approval cycle efficiency, and policy adherence.
• Strategic impact measures, such as total cost of ownership (TCO), supplier concentration, and risk exposure across geographies and logistics routes.

Together, these KPIs form a procurement scorecard that connects sourcing activity to business performance. They also demonstrate to boards and auditors that procurement is managed with the same discipline as finance and production.

Turning this measurement framework into practice requires a robust digital foundation. Traditional tools like spreadsheets or manual reports cannot provide the accuracy, consistency, or traceability needed under modern governance standards.

This is where Metalshub plays a decisive role.

Metalshub’s digital procurement platform embeds data capture and measurement directly into the sourcing workflow. Every RFQ, offer, negotiation round, and award is stored in structured data, creating a complete and auditable record.

Key features that simplify procurement measurement include:

• Automatic capture of negotiation savings: The platform tracks first and final offers within each event, providing instant visibility into negotiation performance.
• Integrated Purchase Price Variance (PPV) benchmarking: Prices are automatically normalised for currency, Incoterms, payment terms, and quality. Procurement teams can compare awarded prices against market indices, budgets, or previous transactions in real time.
• Supplier Choice Savings tracking: Competing offers are standardised within the same interface, allowing buyers to quantify premiums or savings linked to supplier selection.
• Governance and compliance monitoring: Offer ratios, reaction-to-invite ratios, and approval thresholds can be monitored automatically, ensuring procurement cycles remain transparent and policy-compliant.
• Analytics Centre dashboards: Procurement leaders gain access to configurable dashboards showing savings waterfalls, PPV trends, supplier engagement metrics, and compliance KPIs, all in one place.

By capturing structured data at every step, Metalshub eliminates the manual consolidation and subjective adjustments that often distort procurement reporting. Measurement becomes an integrated outcome of the sourcing process rather than an additional administrative task.

The benefits of leveraging the Metalshub digital platform for accurate procurement measurement extend beyond internal reporting.

• Transparency builds trust with finance and executive stakeholders.
• Consistency improves supplier negotiations, as decisions can be justified using objective benchmarks.
• Auditability supports compliance with CSRD, CSDDD, and internal governance frameworks.
• Learning loops emerge naturally as data from past events feeds into continuous improvement.

Most importantly, teams that measure performance effectively can identify where savings are genuine, where they result from market movements, and where new opportunities for improvement exist. This transforms procurement from a transactional function into a strategic value driver.

Procurement’s role in metals and mining is evolving fast. The expectation is no longer to “buy well” but to prove how and where value is created. With complex supply chains, volatile markets, and rising transparency requirements, the proof must rest on data, not intuition.

Digital platforms like Metalshub provide the structure to make this possible. By embedding measurement directly into procurement workflows, it ensures that every sourcing decision can be analysed, benchmarked, and reported with confidence.

How to Measure Cost Savings in Raw Material Procurement provides the complete practical toolkit, including detailed KPI definitions, formulas, and real-world examples.

👉 Download the whitepaper to learn how to measure, benchmark, and report procurement savings with precision and credibility.