Contracted share against actual spend by category: the procurement roll-up

Every sales measure on this site runs one way: how much of a customer's spend do you hold. Procurement runs it the other way: how much of your spend does each supplier hold, and did it go where the contract said. The roll-up is the same shape. This guide sets it out from the purchase ledger, with the checks that make the category review a short meeting.

The measures

Per category:

Compliance = spend with the contracted supplier at contracted terms ÷ total category spend Off-contract = total category spend − compliant spend, broken out by site and requester

Per category and supplier:

Supplier share = spend with the supplier ÷ total category spend

Per category, the concentration: the largest supplier's share against a threshold, and whether a second qualified source exists.

The rows you need

• Purchase ledger or accounts payable: one row per invoice line with supplier, category, site, requester where recorded, date and amount.
• Contracts: one row per contract with category, supplier, sites covered, contracted share and price terms, start and end dates.
• Supplier master: identifiers, and the qualified supplier list per category where it exists.

Supplier identifiers only.

The roll-up

1. Invoice line: contracted or not, by matching supplier, category, site and date against the contracts in force.
2. Category by supplier: spend, share.
3. Category: compliance, off-contract by site and requester, concentration.
4. Site and company: assert that category spend sums to site spend, sites to the company, and the company to the ledger total.

ledger total = Σ sites = Σ categories = Σ suppliers

The by-supplier equality catches a supplier with two identifiers after an acquisition. The by-category equality catches invoice lines coded to a category that no longer exists.

A worked example

One category, one quarter, one contracted supplier at a contracted 80 percent share.

Compliance: 86 percent of spend went to contracted suppliers, but the primary is 18 points below its contracted share, and one requester at two sites accounts for most of the leak. That is the category manager's meeting, with the site names on the page.

Concentration and continuity

The same table answers a different question: what happens if Supplier 1042 stops. At 62 percent of the category with one qualified secondary, the answer is a rough quarter. Categories where the largest supplier exceeds a threshold, and parts or services with no second qualified source, belong on the same report as compliance, because the fix for a compliance leak, consolidating onto the primary, makes the concentration worse.

Where it goes wrong

Contract dates ignored. Spend in the month before a contract started is counted as off-contract, and the compliance number is wrong for a year. Match on the contract in force on the invoice date.

Categories coded at the wrong level. Invoice lines coded to a parent category cannot be matched to a contract at the child level. Normalise categories before matching and count the lines that did not match.

Supplier duplicates. The same supplier under two identifiers appears as compliant and off-contract at once. The supplier master needs one identifier per legal entity, and the by-supplier assertion shows when it does not.

Sites the contract does not cover. A site outside the contract's scope buying from a non-contracted supplier is not a compliance failure. Carry the contract's site coverage and report those lines separately.

Every month, from the ledger

Mapped once, the ledger export and the contract list produce compliance, off-contract by site and concentration per category every month, reconciled to accounts payable. Covirage builds this from the export as it is. The procurement page describes the setup, and you can upload a sample ledger export and see the roll-up on your own rows.