If you lead procurement, you’ve probably had this conversation more than once. You run a tender, you negotiate hard, you get the unit price down, and then a few months later someone asks the uncomfortable question: “So why don’t we feel the savings?”
The answer is usually not that procurement did anything wrong. It’s that unit price is only one small part of the cost picture. In retail, the real money is won or lost in TCO (total cost of ownership). Unit price is visible. TCO is what actually hits the business, because it includes everything around the product that makes it usable, available, and manageable across stores.
That’s why we work under a simple principle: control creates savings. Not as a slogan, but as a practical reality. You can’t improve TCO where you don’t have control, and you can’t control what you can’t see.
This is easiest to understand through a before-and-after scenario I see a lot in retail.
The before: sourcing is covered, but the model is fragmented
On paper, everything looks reasonable. Essentials and GNFR items are sourced. Category owners have suppliers. Contracts exist. Stores can order what they need. But once you look at the operational reality, you start seeing the TCO leakage.
Deliveries multiply. A store isn’t getting a delivery, it’s getting a stream of them. Different suppliers, different cut-offs, different carriers, different paperwork, and different “small issues” that turn into daily noise. Every delivery still needs receiving, checking, storing, and following up when something is missing or wrong. That work sits in the store. It does not show up in your unit price comparison, but it absolutely shows up in your true cost base.
Then finance feels the fragmentation too. More suppliers means more invoices, more approvals, more mismatches, more credit notes, more exception handling. APQC benchmarking puts the median total cost to process an accounts payable invoice at $6.00 per invoice, cross-industry. That number matters because invoice volume creeps up quietly when categories are split across vendors, and it becomes a structural cost that procurement often “inherits” without ever choosing.
Underneath all of that, procurement loses the steering wheel. Not because people are careless, but because fragmentation makes it almost impossible to steer consistently. Different stores buy different versions of the same thing. Local substitutions become habits. Assortments creep. Ordering channels multiply. When those things happen, cost control becomes reactive. You don’t manage spend, you manage exceptions. And reactive procurement is expensive procurement, especially once you look at the full TCO.
If you want a fast way to spot this situation, it usually shows up in a handful of symptoms:
- stores receive multiple deliveries per week for basics that could move in one flow
- invoice volume is high, and exceptions are normal
- usage is hard to see clearly by store, SKU, or region without manual work
- stores over-order “just in case” because availability trust is low
- near-identical SKUs exist across suppliers and regions
None of these are “unit price problems.” They are operating model problems.
The moment it shifts: stop negotiating harder and start removing variation
In the scenarios where cost control starts to stick, the turning point is rarely a tougher negotiation. It’s a different question: what would it look like if we controlled the operating model, not just the unit price?
That’s where procurement and supply chain finally align, because the goal isn’t to force every store to behave perfectly. The goal is to design a system where the default behaviour drives better TCO. Fewer touchpoints, fewer exceptions, less waste, less urgent transport, and less admin.
This is exactly what “control creates savings” means in practice. It means the system stops leaking by design.
The after: one flow, one standard, one set of numbers
What changes first is consolidation. Not as a buzzword, but as fewer moving parts. Instead of multiple vendors pushing deliveries into the store network, the retailer moves toward a more centralised flow for essentials and GNFR. Fewer deliveries hit stores, fewer handovers happen in the backroom, and fewer “where is it?” moments land on store managers. That immediately improves TCO, because the operational burden around each order drops, not just the unit price.
Then the bigger impact follows. Ordering becomes controlled. Not controlled as in bureaucratic, but controlled as in consistent and visible. Rather than stores ordering through scattered channels, the business shifts to a standardised assortment and a single ordering path. In a Worldpack setup, this is typically done through our Brandstore environment, with clear assortment governance and a model that supports reliable availability.
Once you remove the easy escape routes, local buys, duplicate SKUs, and random substitutions, you also remove the silent TCO drivers that sneak in under pressure. Instead of variation becoming the norm, standard becomes the norm. And standard is what procurement can actually optimize.
This is also where data becomes actionable. With fewer suppliers and a standardised assortment, you finally get clean usage insight. You can compare stores properly, spot outliers that can be fixed, and see which items look “cheap” on paper but are expensive because they trigger problems downstream. Procurement moves from contract management into true cost control, because you can steer based on what is used, where it’s used, and what it causes operationally.
One of the most underestimated shifts is availability trust. When stores don’t trust availability, they don’t order what they need, they order what they fear they won’t get later. That creates overstock, write-offs, and messy replenishment cycles. A controlled model restores trust. Trust removes buffer behaviour. And buffer behaviour is expensive TCO.
Where real savings actually come from
Procurement leaders usually appreciate seeing the levers spelled out clearly, because TCO can otherwise stay theoretical. In practice, the savings stack in predictable places:
- fewer deliveries, which reduces store handling time and operational disruption
- fewer suppliers, which reduces invoice volume and exception handling
- standardised ordering, which reduces maverick spend and errors
- more reliable availability, which reduces buffer ordering and write-offs
- better visibility, which enables continuous optimisation instead of firefighting
This is why unit price savings so often disappoint. They target one line item while the leakage sits everywhere else. TCO savings, on the other hand, come from removing the leakage. That’s why they stick.
What to do next, without making it a transformation
If your goal is consideration, meaning you want to assess whether a different model is worth it, start small and measurable. Pick one or two categories where fragmentation is obvious. Map deliveries, invoice volume, and store handling touchpoints. Establish a baseline. Then test what consolidation plus standardised ordering would realistically change in your TCO, both in procurement and in the supply chain that procurement depends on.
If you want, that’s exactly the kind of conversation I’m happy to have. Not “here’s a glossy savings percentage,” but “here’s where your TCO is leaking, and here’s how control removes it.”
If cost control keeps turning into firefighting, you don’t need harsher negotiations. You need control. And when you get it, the TCO follows.