How We Saved a Regional Utility $2.5 Million by Fixing Procurement From the Ground Up
- Mike Johnstone
- 3 days ago
- 2 min read
Driving Cost Savings Through Procurement
Industry: Utilities | Client Size: $600M Regional Integrated Gas and Electric Provider
Situation
This regional utility was spending money it could not track.
Sixty percent of invoices arrived without a purchase order. Contracts were inconsistent across the supplier base. Payment terms were set by vendors, not by the client. Cash was draining out without controls to stop it.
The procurement team was reactive. Buyers chased invoices instead of managing suppliers. There was no strategic sourcing process. No leverage. No visibility into where spend was going.
Leadership knew costs were too high. They did not know how to fix it.
Actions
We started with the foundation.
First, we implemented a top-tier ERP procurement system and began pushing spend through purchase orders. No PO, no payment. That single discipline forced accountability across the organization.
Next, we built the infrastructure that procurement was missing. We developed master supply agreements and standard contract templates. We introduced a seven-step strategic sourcing process that gave buyers a repeatable way to run competitive bids and negotiate from a position of strength.
Then we went to work on suppliers. We renegotiated pricing and terms across key spend categories. We identified a major capital project where procurement had not been involved early enough, and we stepped in to reduce costs before contracts were signed.
Every action pointed at the same goal: put the client in control of its own spend.
Results
The results came fast, and they compounded.
PO-backed invoices grew from 9% to 40%, giving leadership visibility into spend for the first time
Cash flow improved by $1 million, generating $120K in annualized savings from payment term improvements alone
On a single major project, we negotiated $1.6 million in cost reductions and an additional $820K in cash flow improvement
Recurring annual savings reached $872K and continue to grow
Total impact: over $2.5 million in documented savings and cash flow gains. Procurement shifted from a cost center with no controls to a strategic function with measurable results.
What This Means for You
If your invoices arrive without purchase orders, your suppliers are setting the terms. That is not a vendor problem. It is a process problem.
We have fixed it before. We can fix it for you.
Every engagement starts with a free 30-minute call. You tell us where procurement is breaking down. We tell you exactly where to start.
No pitch. No obligation. Money-back guarantee if we do not deliver results in six months.
