How Do Customer Firms Define Value for Money and Net Yield of Value – for Both Customer and Supplier?

Jim Bergman

In today’s procurement environment, “value for money” (VfM) and “net yield of value” are no longer one-sided metrics. They’ve evolved into shared benchmarks of success – measured not just by cost, but by strategic alignment, operational performance, and long-term impact for both customer and supplier.

Rethinking “Value for Money”

Customer firms now define VfM through a multidimensional lens:

  • Total Cost of Ownership (TCO): Beyond initial price, this includes lifecycle costs such as maintenance, disposal, and opportunity cost.
  • Performance Outcomes: Does the solution deliver measurable results aligned with business needs?
  • Risk Management: How effectively does the supplier mitigate compliance, continuity, and reputational risks?
  • Strategic Alignment: Does the offering support the customer’s mission, values, and long-term goals?

This shift moves procurement from transactional to transformational—where value is defined by outcomes, not just inputs.

Understanding Net Yield of Value

Net yield of value refers to the net benefit each party realizes after accounting for costs, risks, and effort. It’s a two-way equation:

For the Customer:

  • Gains in operational efficiency
  • Improved service delivery or mission outcomes
  • Access to innovation and emerging capabilities
  • Reduced exposure to financial, legal, or reputational risk

For the Supplier:

  • Sustainable profit margins
  • Contract stability and predictability
  • Enhanced brand reputation
  • Strategic positioning in key markets

When both parties realize positive yield, the relationship becomes a platform for shared value—not just service delivery.

How Customer Firms Measure Value and Yield

Instead of relying solely on financial metrics, customer firms assess value across several dimensions:

  • Financial Metrics: Customers look at ROI, cost avoidance, and budget impact. Suppliers focus on margin, cost-to-serve, and revenue predictability.
  • Operational Metrics: Customers assess delivery speed, uptime, and SLA adherence. Suppliers track efficiency and resource utilization.
  • Strategic Metrics: Customers evaluate mission alignment and innovation enablement. Suppliers consider market access and strategic partnerships.
  • Relational Metrics: Customers value trust, transparency, and responsiveness. Suppliers benefit from loyalty and ease of doing business.

These metrics are often embedded in contracts, scorecards, and post-award reviews to ensure accountability and continuous improvement.

Why This Matters

Defining value in multidimensional terms allows customer firms to:

  • Encourage suppliers to innovate and deliver beyond the baseline
  • Avoid adversarial negotiations focused solely on price
  • Build resilient partnerships that adapt to change
  • Advance mission outcomes through strategic sourcing

Suppliers, in turn, gain clarity on what matters most – enabling them to tailor solutions, justify pricing, and build trust.

Final Thought: Value Is Co-Created

Value for money and net yield of value are not static – they’re dynamic, co-created outcomes. The best procurement leaders treat value as a strategic dialogue, not a transactional checkbox.

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Published by Jim Bergman

Jim Bergman is a commercial contract professional with global experience spanning the USA, Latin America, UK, Europe, China, South Korea, Japan, India, SE Asia, the Middle East, Africa and Australia. He has worked on a wide range of direct and indirect spend categories in numerous sectors, developing a deep knowledge of services, goods and technology procurement and sales. Across this wide array of commodity and services experience, Jim has found the keys to success in maximizing value for money through customer-supplier relationships founded on innovative category management and strategic sourcing practices, key performance metrics and measures, as well as Total Cost of Ownership principles and collaborative contracting tenets. He has shared his knowledge through advisory engagements, as well as in developing and delivering training programs both on-line and in classrooms, in both open-enrollment and internal environments. Jim has assisted his clients through all phases and steps of contracting, negotiation, strategic sourcing and bidding processes, demonstrating value generation in excess of $250 million. His audiences and clients have included over 7,000 attorneys and commercial professionals students from over 1,000 corporations and public-sector entities.

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