"Spend Under Management"...Is It Growing In Your Organization?

Spend under management typically refers to organizational spend that procurement is authorized to influence, and actively performs strategic reviews of spend, contracts, compliance, etc. within the spend category.

Top-performing procurement teams can reach 75-85% of spend under management. Ways to improve spend under management include:

• Streamline overall processes and use automation to drive efficiencies

• Improve visibility by reviewing spend categories, what is purchased, and chosen suppliers

• Ongoing supplier performance evaluations (QBRs or score carding events) to ensure fair prices, service, term, and mitigate risk 

• Keep track of addressable, impactable, and unmanaged spend 

• Outsource tactical work to allow your team to focus on strategic activities and growing sphere of influence on spend

In these inflationary times, procurement departments are finding it difficult to deliver cost reductions and are having to highlight cost avoidances. Senior executives understand that prices are rising and holding a price to previous years contracted amounts are a win. "Spend under management", combined with cost reductions and/or avoidances shows senior executives the value procurement delivers as well as the opportunities to expand procurement's reach.

Procurement leaders should evaluate their team's workload and see what activities can be offloaded to enable focus on growing spend under management.