{"id":48504,"date":"2023-02-08T01:25:44","date_gmt":"2023-02-08T06:25:44","guid":{"rendered":"https:\/\/simfoni.com\/?p=48504"},"modified":"2023-02-15T03:04:43","modified_gmt":"2023-02-15T08:04:43","slug":"spend-management-part-1","status":"publish","type":"post","link":"https:\/\/simfoni.com\/spend-management\/spend-management-part-1\/","title":{"rendered":"Spend Under Management Part One:\u00a0 Connecting Procurement to Your Core Business"},"content":{"rendered":"
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Procurement<\/a> <\/span>is still often seen as a non-strategic back-office function. <\/span>This is because p<\/span>ractitioners often focus too narrowly on measuring cost savings<\/span> <\/span>directly <\/span>from sourcing<\/a> initiatives and lose sight of how those initiatives impact core financial metrics<\/span><\/span>—<\/span>such as total cost of ownership (TCO)<\/span>, operating profit, working capital<\/span> and cash flow<\/span>, among others. <\/span>But by a<\/span>dopting a well-structured<\/span>, <\/span>strategic<\/span> spend management<\/span><\/a> framework<\/span>, a distinct line can be drawn <\/span>from procurement <\/span>to<\/span> its impact on<\/span> <\/span>these <\/span>core <\/span>business metrics<\/span>,<\/span> showcasing how procurement <\/span>is<\/span> actually <\/span>an<\/span> important<\/span> value driver for the business<\/span>.<\/span> <\/span> <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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The concept of Spend Under Management<\/span> (SUM) provides exactly that framework. In this <\/span>three-part <\/span>blog <\/span>series<\/span> we’ll outline the framework in greater detail, <\/span>how you can get started<\/span>, and <\/span>what you should expect to get from it.<\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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What is Spend Under Management<\/span>?  <\/h2>\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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SUM is an enterprise initiative<\/span> that impacts<\/span> spend<\/span> in each <\/span>business unit<\/span><\/span>, touching every category and supplier who supplies a product or service in order to achieve 85<\/span> percent or more <\/span>of managed <\/span>spend<\/span>. Past research from analyst firms like Aberdeen identifies that companies can achieve 5<\/span> to 2<\/span>0 percent<\/span> cost<\/span> savings for each new dollar of <\/span>spend<\/span> brought under management. This can result in millions or even tens of millions in cost savings<\/span> that can be either reinvested or dropped to the bottom line as realized savings impacting EPS<\/span> (Earnings Per Share)<\/span>. <\/span>B<\/span>usinesses <\/span>that <\/span>implement SUM<\/span> can minimize costs by reducing expenditures on unnecessary or undesirable inventory, reduce supplier <\/span>lead<\/span> times to <\/span>improv<\/span>e response times, reduce spending on <\/span>staffing<\/span> and improve service quality by optimizing on-time deliveries.<\/span><\/span> <\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Moreover, SUM is much more than a sourcing framework. It emphasizes the use of intelligent technology, actionable data, and robust processes to meet business objectives. It also considers often overlooked non-pricing levers such as ensuring adherence to contract terms and pricing, purchase order compliance, effective demand management, and supplier performance management – where leakage most often occurs.<\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t

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Read More:-<\/strong><\/span> 3 Ways Proper Spend Management<\/span> Can Ease Inflation<\/span>ary Pressures<\/a><\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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