How are savings calculated in Spend Intelligence? Follow

The LevaData Platform helps your sourcing and finance teams see both the savings you have already achieved and the savings you could still capture. Savings calculations respect your organization’s financial configuration so that the reference “Baseline Cost” used in calculations aligns with how you report and plan costs.

Identifying the Baseline Cost

For each part, LevaData chooses a reference cost to serve as the Baseline Cost. This baseline may come from:

• a configured standard cost (typically provided by your Finance organization) and reference time period, or
• the part’s cost in a selected baseline reference quarter (for example, last year or last quarter).

The priority used to determine the baseline cost is configured by your organization. For more details on how baseline cost is defined and prioritized—including the difference between Standard and Baseline Cost—see the "Priority Definition of Baseline Cost for a Part" article or reach out to your Customer Success Manager.

How Demand Factors into Savings

Savings metrics are volume‑weighted because the value of a cost reduction depends on how many units you expect to buy. Demand represents the total quantity considered in the calculation and may include both historical volumes and future forecasted volumes. When a customer part number (CPN) maps to multiple manufacturer part numbers (MPNs), contract manufacturers (CM/ODMs) or spans multiple time periods, LevaData splits demand across those dimensions to weight cost differences appropriately.

If you need a refresher on how CPN costs are calculated when multiple MPNs are involved, see What is the difference between CPN and MPN Cost?.

Spend and Savings Formulas

The platform uses the following formulas, where Current Cost is the negotiated or actual price you are paying, and Demand is the relevant volume:

• Spend $  =  Current Cost × Demand
• Savings $  =  (Baseline Cost − Current Cost) × Demand
• Savings %  =  (Baseline Cost − Current Cost) ÷ Baseline Cost × 100 %

This aligns with standard procurement guidance: cost savings are calculated as the difference between the baseline price and the new price after negotiation. Multiplying by demand translates the unit savings into total dollar impact.

Summary

LevaData computes savings by comparing your configured Baseline Cost for each part against the Current Cost you pay today. By multiplying that cost difference by the demand volume, the platform provides:

• A spend estimate based on current pricing and volume;
• A dollar savings amount showing how much you stand to save if you achieve the baseline cost; and
• A savings percentage that normalizes the savings relative to the baseline.

Because both the Baseline Cost and the demand assumptions come from your organization’s data and configuration, these calculations reflect your unique context rather than generic market benchmarks.