Building Margin Resilience Through Better Procurement

Asset-intensive organisations are under growing pressure to maintain operational reliability while controlling costs. Volatility, rising expenses, regulatory scrutiny, and tighter budgets mean traditional approaches, such as redundancy, excess inventory, and multiple suppliers, are no longer sustainable. 

The real opportunity lies in managing spend more effectively. With stronger data, disciplined processes, and consistent supplier management, organisations can unlock value without compromising operational performance or asset reliability. 

Although, this is often not prioritised by businesses, the numbers don’t lie. A 2% reduction in operating costs from better procurement can deliver a $20m increase in profit for a $1bn spend operation.

Current Challenges

In capital-intensive industries, spend and supplier management hasn’t kept pace with the rest of the business. After years of localised decision-making and ad hoc sourcing, supplier networks have become fragmented, contracts are often out of date or not fit for purpose, and procurement practices vary from site to site. The focus on operational up-time exacerbates this.  

The result isn’t deliberate overspending; it’s quiet value loss through inefficiency and lack of coordination. Common issues include: 

• Scattered procurement ownership: Different sites and teams negotiate separately, leading to duplicated suppliers and missed opportunities to use collective scale. 

• Poor contract management: Outdated terms, limited oversight, and weak compliance tracking allow costs and performance to drift over time. 

• Unreliable data: Inconsistent or incomplete spend data makes it hard to see where the money actually goes, identify savings opportunities, or measure benefits. 

These gaps add up. It’s not uncommon for ~10% of a contract’s value to disappear through disorganisation, weak governance, and missed opportunities costs that rarely show up until it’s too late. This renders all price negotiations that can take months of work, useless.  

It starts with good data 

Procurement is changing. New tools, systems, and expectations are reshaping how spend is managed and how results are delivered. What was once a largely transactional function is now expected to manage cost strategically and work across the business to create value. 

• Smarter data and analytics: Modern spend and contract management tools make it easier to track where money is going, identify duplicate suppliers, and monitor whether negotiated savings are achieved. Predictive analytics can flag pricing trends, supplier risks, and contract expiries before they become issues. 

• Automated processes and governance: Integrated ERP systems are taking much of the manual work out of purchasing, improving accuracy and freeing up time for more strategic activities. These systems also help suppliers by providing consistent information and faster payment cycles. 

These improvements are helping procurement teams move from firefighting to forward planning. But the fundamentals remain critical for lasting results. 

A Three-Phase Approach to Sustainable Value 

Data is the foundation for better procurement, but it’s how organisations use it that makes the difference. Sustainable cost reduction can usually be achieved through a structured, three-phase approach: 

Find the Money 

• Review all spend and contracts to understand where value is being lost. Identify supplier duplication, off contract spend, and categories that haven’t been reviewed for several years.  

• Maintain a contract register that highlights upcoming renewals and opportunities for consolidation or renegotiation.  

• A sourcing plan should be completed each year. 

Get the Money 

• Develop a sourcing plan that outlines which categories will be addressed, the approach for each (e.g. renegotiation, RFP, or full tender), and the resources needed across procurement, operations, legal, and commercial teams. 

• Execute the plan systematically and track delivery of expected benefits. 

Keep the Money 

• Assign clear ownership for each contract, both commercial and operational. 

• Ensure regular reviews of performance, pricing, and forecasting obligations. 

• Use contract management systems and simple governance processes to keep suppliers accountable and value locked in. There are plenty of software solutions that can automate a lot of this. 

Without this discipline, it’s common for teams to spend months negotiating great deals that quietly unravel over time.  

What to Consider? 

Transformation isn’t just about new systems; it’s about enabling people to work better. Most procurement teams want to do the right thing, but many lack reliable data, adequate reporting tools, or the time to manage contracts properly. 

Investing in systems and processes helps remove those barriers, giving teams the visibility and automation they need to focus on higher-value work. With strong leadership support, data-driven decision-making becomes part of how the business operates, improving efficiency, compliance, and financial performance across the board. 

Just as important is collaboration. Procurement works best when it’s connected and aligning closely with maintenance and operations teams, engaging suppliers as partners, and being involved early in business planning. When treated as a strategic function rather than a back-office task, procurement can drive better decisions, reduce risk, and create genuine competitive advantage. 

To Summarise 

A structured procurement roadmap, focused on planning, contract management, and data-driven decision-making, protects margins, stabilises supply, and strengthens operational resilience. Every month of delay allows inefficiency to embed and value to leak. Organisations that act now position themselves to reduce costs, safeguard assets, and gain a sustainable competitive edge. 

How Argon & Co helps 

Argon & Co routinely delivers large procurement improvement and cost reduction programs to support heavy industry companies to protect their and strengthen their margins – we help clients find the money, get the money, and keep the money. 

Our approach combines deep operational understanding with commercial discipline, ensuring cost reduction does not come at the expense of reliability, safety, or performance. 

 Contact us today to discuss how a targeted procurement health check could unlock immediate savings and build lasting margin resilience. 

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Lachlan Brown