Spend under management

The share of third-party spend that procurement sourced, contracted or approved, from payables joined to the contract register and the approved supplier list. Three buckets, on contract, approved off contract and unmanaged, sum to total spend. The denominator that makes a savings claim honest.

DefinitionThe share of third-party spend that procurement sourced, contracted or approved, from payables joined to the contract register and the approved supplier list. Three buckets, on contract, approved off contract and unmanaged, sum to total spend. The denominator that makes a savings claim honest.

Approved is not contracted

An approved supplier at list price is a separate bucket from a negotiated contract.

Uncategorised is usually unmanaged

Dropping it flatters the figure. List it.

How it is computed

Invoices with a contracted supplier, in force on the date, covering the category, through the agreed channel, divided by addressable spend.

Example

Of $112 million addressable, invoices passing the test total $61 million: 54 percent. The self-reported figure was 82.

Where it goes wrong

A category counted as managed because a contract exists somewhere in it.

Articles that use this term

Procurement and supply chain · Procurement

Spend under management: the share of spend procurement has actually seen

How a procurement team measures spend under management from the payables ledger and its own sourcing records: spend on contracts procurement negotiated, spend on catalogued or approved suppliers, and spend that reached payables without procurement's involvement, by category and by business unit, why the third bucket is where savings claims fail, and the identity that ties the three to total third-party spend.

16 Sept 20262 min read Procurement and supply chain · Procurement

Ten questions a chief procurement officer asks, and the table that answers each

The ten questions a CPO puts to the category managers, how much spend do we actually manage, where is off-contract buying coming from, did the savings reach the ledger, how many suppliers are in the tail and which to keep, are we paying to terms, where is single-source risk, which suppliers are slipping, is the contract price being applied, which contracts expire when, and what changed, each with the computed table from the payables ledger and the contract register, the identity behind it, and the answer a CPO should not accept.

16 Sept 20263 min read Data quality and reconciliation

The identity by industry: what has to sum to what on twelve desks

Every report on this site rests on an identity, a sum that must hold before any measure is read, and the sum is different on every desk: revenue to the ledger, TEU to booked TEU, seats to contracted seats, controls to the register, rental days to invoiced revenue. This hub gives, for twelve industries, the identity, the exports it joins, the failure it most often catches, and the guide where it is used.

16 Sept 20263 min read Procurement and supply chain · Procurement

KPIs for procurement teams: ten measures that matter, each with its formula and the export it comes from

The ten KPIs a procurement function should run on, each with its formula, the export it comes from and what it tells you: spend under management by invoice, contracted share against actual spend by category, maverick spend by requester, savings realised against savings claimed, suppliers per category and the tail, payment terms compliance, supplier performance against own baseline, contract expiry coverage, price variance on like items, and supplier concentration. Also the three measures most teams miss, the figures to drop, the identities, and who owns what.

17 Sept 20264 min read Procurement and supply chain · Procurement

Spend under management on ten invoices: the whole arithmetic on one page

The complete spend under management calculation on ten payables invoices, small enough to check by hand: each invoice's supplier, category, business unit and PO reference, the contract register's in-force agreements, the approved supplier list, the bucket per invoice, on contract, approved off contract, or unmanaged, the share by category and by unit, the uncategorised invoice that is its own finding, and the identity that the three buckets sum to total spend, so a reader can reproduce every figure and then run it on their own payables export.

17 Sept 20263 min read How-to guides

The benchmark pages: what is a good number for sixteen measures, and why the answer is a table

A hub for the benchmark questions on this site: what is a good share of wallet, customer concentration, pipeline coverage, win rate, forecast accuracy, dormancy rate, account coverage, net revenue retention, renewal rate, seat utilisation, quote conversion, OTIF, cost to serve, spend under management, realisation and hit ratio. Each page gives the ranges people quote, says what those ranges assume, and sets out the three measurable things that decide the right figure for one business. This page lists them with the short answer to each.

17 Sept 20263 min read