The percentage of the company’s total spend that is managed by the strategic sourcing function. A higher percentage of spend under management is generally better, as it indicates that the strategic sourcing function is effectively managing and optimizing the company’s procurement processes.
Procurement is the lifeblood of any business. It involves buying goods and services necessary for the smooth running of a company. Managing procurement processes efficiently can lead to significant cost savings and improved performance. One of the critical metrics used to measure procurement performance is spend under management. In this article, we will explore the meaning of spend under management, actionable insights, and how to improve on the KPI to boost your company’s procurement processes.
Unlocking the Secrets of “Spend under Management” KPI
Spend under management refers to the percentage of a company’s total spend that is managed by the strategic sourcing function. The strategic sourcing function is responsible for sourcing and negotiating contracts for goods and services, managing supplier relationships, and ensuring compliance with procurement policies and procedures. A higher percentage of spend under management is generally better, as it indicates that the strategic sourcing function is effectively managing and optimizing the company’s procurement processes.
To unlock the secrets of spend under management, companies need to understand the importance of data. Data is crucial in the procurement process, as it provides insights into supplier performance, contract compliance, and spend analysis. Companies can use data analytics tools to measure and track their spend under management KPI. Using these tools, they can identify areas of improvement and optimize their procurement processes.
Another key to unlocking the secrets of spend under management is to establish an effective supplier management program. Supplier management involves selecting, monitoring, and evaluating suppliers based on specific criteria such as quality, price, delivery, and compliance. By establishing an effective supplier management program, companies can ensure that they are getting the best value for their money and reduce the risk of non-compliant suppliers.
How to Boost Company’s Procurement with Spend under Management
Boosting a company’s procurement with spend under management involves implementing a series of actionable insights. The first insight is to establish clear procurement policies and procedures. Procurement policies and procedures provide a framework for procurement activities, ensuring that they are consistent, transparent, and compliant with legal and regulatory requirements.
The second insight is to develop a procurement strategy that aligns with the company’s overall business objectives. The procurement strategy should identify the key categories of spend and prioritize them based on their impact on the business. By prioritizing spend categories, companies can focus their resources on areas that offer the most significant opportunities for cost savings and performance improvements.
The third insight is to leverage technology to automate procurement processes. Procurement automation involves using software applications to streamline procurement activities such as requisitioning, purchasing, invoicing, and payment. By automating these processes, companies can reduce manual errors, improve efficiency, and increase transparency.
The fourth insight is to establish a strong supplier relationship management program. Supplier relationship management involves building and maintaining relationships with suppliers based on trust, transparency, and mutual benefit. By establishing strong supplier relationships, companies can negotiate better deals and improve supplier performance.
The fifth insight is to measure and track the spend under management KPI continuously. Companies should use data analytics tools to monitor their spend under management and identify areas of improvement. By measuring and tracking this KPI, companies can optimize their procurement processes and achieve significant cost savings and performance improvements.
In conclusion, spend under management is a critical metric for measuring procurement performance. By understanding the meaning of spend under management, implementing actionable insights, and leveraging technology, companies can improve their procurement processes and achieve significant cost savings and performance improvements. By unlocking the secrets of spend under management, companies can gain a competitive edge and position themselves for long-term success.