{"id":48512,"date":"2023-02-15T01:45:19","date_gmt":"2023-02-15T06:45:19","guid":{"rendered":"https:\/\/simfoni.com\/?p=48512"},"modified":"2023-02-15T04:33:10","modified_gmt":"2023-02-15T09:33:10","slug":"spend-management-part-2","status":"publish","type":"post","link":"https:\/\/simfoni.com\/spend-management\/spend-management-part-2\/","title":{"rendered":"Spend Under Management Part Two: The 5 Key Principles of Proper Spend Management"},"content":{"rendered":"<div data-elementor-type=\"wp-post\" data-elementor-id=\"48512\" class=\"elementor elementor-48512\" data-elementor-post-type=\"post\">\n\t\t\t\t\t\t<section class=\"has_eae_slider elementor-section elementor-top-section elementor-element elementor-element-b0b887a elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-eae-slider=\"78369\" data-id=\"b0b887a\" data-element_type=\"section\" data-e-type=\"section\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"has_eae_slider elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-551b4ee\" data-eae-slider=\"3330\" data-id=\"551b4ee\" data-element_type=\"column\" data-e-type=\"column\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-9bb72ef elementor-widget elementor-widget-text-editor\" data-id=\"9bb72ef\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><strong><span class=\"NormalTextRun SCXW117360883 BCX0\" data-ccp-parastyle=\"heading 1\">In our last post, we discussed adopting <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">spend under management<\/span> (SUM) and the first of the five principles<\/span><span class=\"NormalTextRun SCXW117360883 BCX0\" data-ccp-parastyle=\"heading 1\">:<\/span> <\/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\t<\/div>\n\t\t<\/section>\n\t\t\t\t<section class=\"has_eae_slider elementor-section elementor-top-section elementor-element elementor-element-db7806e elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-eae-slider=\"75560\" data-id=\"db7806e\" data-element_type=\"section\" data-e-type=\"section\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"has_eae_slider elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-744151f\" data-eae-slider=\"22544\" data-id=\"744151f\" data-element_type=\"column\" data-e-type=\"column\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1a655f1 elementor-widget elementor-widget-text-editor\" data-id=\"1a655f1\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<ol><li><strong><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Spend Under Management<\/span> Part One:<\/strong> <strong><a href=\"https:\/\/simfoni.com\/spend-management\/spend-management-part-1\/\" target=\"_blank\" rel=\"noopener\">Connecting Procurement to Your Core Business<\/a><\/strong><\/li><li><strong><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Spend Under Management<\/span> Part Two:<\/strong> <a href=\"https:\/\/simfoni.com\/spend-management\/spend-management-part-2\/\" target=\"_blank\" rel=\"noopener\"><strong>The 5 Key Principles of Proper <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Spend Management<\/span><\/strong><\/a><\/li><\/ol>\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<section class=\"has_eae_slider elementor-section elementor-top-section elementor-element elementor-element-3e88233 elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-eae-slider=\"7172\" data-id=\"3e88233\" data-element_type=\"section\" data-e-type=\"section\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"has_eae_slider elementor-column elementor-col-66 elementor-top-column elementor-element elementor-element-111f533\" data-eae-slider=\"86669\" data-id=\"111f533\" data-element_type=\"column\" data-e-type=\"column\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-4adc296 elementor-widget elementor-widget-heading\" data-id=\"4adc296\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">1) Channel spend through intelligent procurement technology.<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-5249aff elementor-widget elementor-widget-text-editor\" data-id=\"5249aff\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW138373657 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW138373657 BCX0\">The first of the SUM principles suggests using technology to improve transparency and drive efficiencies across the organization through automation, but also by enabling tighter control of process and policy, and the capture and interpretation of critical spend data. We covered this principle in our previous blog post. If you haven&rsquo;t read Part One of our <span style=\"color: #ff6600;\"><strong>&lsquo;<span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Spend Under Management<\/span> Series&rsquo;<\/strong><\/span>, <a href=\"https:\/\/simfoni.com\/spend-management\/spend-management-part-1\/\" target=\"_blank\" rel=\"noopener\">you can read it here.<\/a><\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-f03d25f elementor-widget elementor-widget-text-editor\" data-id=\"f03d25f\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><strong><span class=\"TextRun SCXW140639943 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW140639943 BCX0\">Here are the remaining four principles of the SUM framework:<\/span><\/span><span class=\"EOP SCXW140639943 BCX0\" data-ccp-props='{\"201341983\":0,\"335551550\":0,\"335551620\":0,\"335559739\":160,\"335559740\":259}'>&nbsp;<\/span><\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-89dba34 elementor-widget elementor-widget-heading\" data-id=\"89dba34\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">2) Purchase through a formalized requisition process.<\/h2>\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-6a1560c elementor-widget elementor-widget-text-editor\" data-id=\"6a1560c\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW264193637 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun AdvancedProofingIssueV2Themed SCXW264193637 BCX0\">In reality, an<\/span><span class=\"NormalTextRun SCXW264193637 BCX0\"> organization should be targeting to flow 100 percent of spend through a controlled process.&nbsp;These purchasing processes should be governed by policies and procedures that are <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW264193637 BCX0\">complete<\/span><span class=\"NormalTextRun SCXW264193637 BCX0\"> and universally enforced. Simply having them in place is a starting point but the key issue is ensuring they are adhered to, with all <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW264193637 BCX0\">spend<\/span><span class=\"NormalTextRun SCXW264193637 BCX0\"> areas incorporated and reinforced through workflows and business practices. To achieve <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW264193637 BCX0\">this<\/span><span class=\"NormalTextRun SCXW264193637 BCX0\"> you&rsquo;ll need a <a href=\"https:\/\/simfoni.com\/procurement\/\" target=\"_blank\" rel=\"noopener\"><strong>procurement<\/strong><\/a> platform intelligent enough to accommodate the differences in requirements by category and\/or region. With this in place, you&rsquo;ll be able to enable secure data access, simplify and streamline the decision-making process, and ensure that <\/span><span class=\"NormalTextRun SCXW264193637 BCX0\">forecasting and <\/span><span class=\"NormalTextRun SCXW264193637 BCX0\">decision-making is based on best practices and informed by data through <\/span><\/span><a href=\"https:\/\/simfoni.com\/spend-analysis-guide\/\" target=\"_blank\" rel=\"noopener\"><strong><span class=\"TextRun SCXW264193637 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW264193637 BCX0\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">spend analysis<\/span><\/span><\/span><\/strong><\/a><span class=\"TextRun SCXW264193637 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW264193637 BCX0\">, not intuition.<\/span><\/span><span class=\"EOP SCXW264193637 BCX0\" data-ccp-props='{\"201341983\":0,\"335551550\":0,\"335551620\":0,\"335559739\":160,\"335559740\":259}'>&nbsp;<\/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<div class=\"has_eae_slider elementor-column elementor-col-33 elementor-top-column elementor-element elementor-element-66b21d7\" data-eae-slider=\"15440\" data-id=\"66b21d7\" data-element_type=\"column\" data-e-type=\"column\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-1ada380 elementor-widget elementor-widget-text-editor\" data-id=\"1ada380\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<iframe src=\"https:\/\/simfoni.com\/web-stories\/spend-management-part-2\/\" width=\"auto\" height=\"550px\"><\/iframe>\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<section class=\"has_eae_slider elementor-section elementor-top-section elementor-element elementor-element-b9c26da elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-eae-slider=\"13351\" data-id=\"b9c26da\" data-element_type=\"section\" data-e-type=\"section\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"has_eae_slider elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-10d6e50\" data-eae-slider=\"45533\" data-id=\"10d6e50\" data-element_type=\"column\" data-e-type=\"column\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-d1d376f elementor-widget elementor-widget-heading\" data-id=\"d1d376f\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">3) Source in a competitive environment. <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-4440ad0 elementor-widget elementor-widget-text-editor\" data-id=\"4440ad0\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW50474352 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW50474352 BCX0\"><a href=\"https:\/\/simfoni.com\/sourcing\/\" target=\"_blank\" rel=\"noopener\"><strong>Sourcing<\/strong><\/a> in a competitive environment is beneficial to your business because you&rsquo;re more than likely to get the <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">best value<\/span> for your dollar, with competition among suppliers leading to improved efficiency and <a href=\"https:\/\/simfoni.com\/cost-reduction\/\" target=\"_blank\" rel=\"noopener\"><strong>reduced costs<\/strong><\/a>. This is easy to understand but for a myriad of <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW50474352 BCX0\">reasons<\/span><span class=\"NormalTextRun SCXW50474352 BCX0\"> is not always practiced. Using quick quotes in a <a href=\"https:\/\/simfoni.com\/procurement\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Procurement\" target=\"_blank\" rel=\"noopener\">procurement<\/a> tool, web-enabled RFPs, and <a href=\"https:\/\/simfoni.com\/auctions\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Auctions\" target=\"_blank\" rel=\"noopener\">auctions<\/a> are a start, but how you maximize the business value of <a href=\"https:\/\/simfoni.com\/sourcing\/\" data-internallinksmanager029f6b8e52c=\"10\" title=\"Sourcing\" target=\"_blank\" rel=\"noopener\">sourcing<\/a> varies significantly based on category, region, and end customer needs. <\/span><\/span><span class=\"TextRun SCXW50474352 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW50474352 BCX0\"><a href=\"https:\/\/simfoni.com\/esourcing-guide\/\" data-internallinksmanager029f6b8e52c=\"20\" title=\"eSourcing\" target=\"_blank\" rel=\"noopener\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">eSourcing<\/span><\/a> <\/span><\/span><span class=\"TextRun SCXW50474352 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW50474352 BCX0\">solutions are emerging as a fixture in the procurement sector, with a growing number of companies utilizing these tools to drive cost efficiency and provide the right level of visibility into their procurement spend. With the right solution<\/span><span class=\"NormalTextRun SCXW50474352 BCX0\">,<\/span><span class=\"NormalTextRun SCXW50474352 BCX0\"> you&rsquo;ll be able to better understand your complex purchase mix, expose additional discounts and competitive deals, and automate your sourcing activities to optimize outcomes. <\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-e4f59db elementor-widget elementor-widget-text-editor\" data-id=\"e4f59db\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"color: #ff6600;\"><strong>Read More:-<\/strong><\/span>&nbsp; <strong>&nbsp;<span style=\"color: #008080;\">Guide to <a href=\"https:\/\/simfoni.com\/procurement-management\/\" target=\"_blank\" rel=\"noopener\">Procurement Management<\/a><\/span><\/strong><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-8cf319d elementor-widget elementor-widget-heading\" data-id=\"8cf319d\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">4) Ensure contracts are in place and used across all spend. <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-9f11cc9 elementor-widget elementor-widget-text-editor\" data-id=\"9f11cc9\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW125643868 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW125643868 BCX0\">Well-structured and managed contracts are essential to gaining efficiency, reducing risk, and managing effective partnerships with suppliers. In almost any category, 70-90 percent of <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW125643868 BCX0\">spend<\/span><span class=\"NormalTextRun SCXW125643868 BCX0\"> should flow through contracts or pre-negotiated catalogs. This is where specialized talent in <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">in<span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">direct procurement<\/span><\/span> can add value to functional areas and the goods or services they request. However, your <a href=\"https:\/\/simfoni.com\/procurement-teams\/\" target=\"_blank\" rel=\"noopener\">procurement team<\/a> may not have the skill base or knowledge to proactively manage these contracts&mdash;i.e., make sure supplier commitments are met, identify best practices, and bring key market insights to the organization. In addition, you need to ensure your current systems and processes enable efficient transactions against your supplier contracts. For example, there could be leakage or <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">maverick spend<\/span>ing that is bypassing defined processes. That&rsquo;s where, again, your procurement specialists can make an impact, but not every organization has the resources to dedicate such expertise. A <a href=\"https:\/\/simfoni.com\/contract-management\/\" data-internallinksmanager029f6b8e52c=\"6\" title=\"Contract Management\" target=\"_blank\" rel=\"noopener\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">contract management<\/span><\/a> platform can enable more efficient <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">acquisition<\/span> by providing visibility into agreements, project milestones, and performance <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">metrics<\/span> that can be used to create dynamic agreements based on real-time data.<\/span><\/span><span class=\"EOP SCXW125643868 BCX0\" data-ccp-props='{\"201341983\":0,\"335551550\":0,\"335551620\":0,\"335559739\":160,\"335559740\":259}'>&nbsp;<\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-b2e20b1 elementor-widget elementor-widget-heading\" data-id=\"b2e20b1\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"heading.default\">\n\t\t\t\t\t<h2 class=\"elementor-heading-title elementor-size-default\">5) Provide closed-loop <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">metrics<\/span> and management. <\/h2>\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-fd66823 elementor-widget elementor-widget-text-editor\" data-id=\"fd66823\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW183949197 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW183949197 BCX0\">A closed-loop performance measurement and management system is a key success factor in achieving maximum <a href=\"https:\/\/simfoni.com\/strategic-sourcing\/\" target=\"_blank\" rel=\"noopener\"><strong>sourcing strategy<\/strong><\/a> acceptance and savings capture. By &lsquo;<\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW183949197 BCX0\">closed-loop<\/span><span class=\"NormalTextRun SCXW183949197 BCX0\">&lsquo;, we mean a system with the ability to <\/span><span class=\"NormalTextRun AdvancedProofingIssueV2Themed SCXW183949197 BCX0\">take action<\/span><span class=\"NormalTextRun SCXW183949197 BCX0\"> on the monitored performance and combine the results with strategic goals to drive business value and impact. By utilizing robust <\/span><\/span><span class=\"TextRun SCXW183949197 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW183949197 BCX0\"><a href=\"https:\/\/simfoni.com\/spend-analytics\/what-is-spend-analytics-why-and-how-it-is-implemented\/\" data-internallinksmanager029f6b8e52c=\"24\" title=\"Spend Analytics\" target=\"_blank\" rel=\"noopener\">spend analytics<\/a><\/span><\/span><span class=\"TextRun SCXW183949197 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW183949197 BCX0\"> tools that allow you to view information at any level of granularity, <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">cost savings<\/span> targets can be explicitly linked to the financial objectives of the business<\/span><span class=\"NormalTextRun SCXW183949197 BCX0\">, and ultimately impact those core business <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">metrics<\/span> <\/span><\/span><span class=\"TextRun SCXW183949197 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"none\"><span class=\"NormalTextRun SCXW183949197 BCX0\">like TCO, operating profit, <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">working capital<\/span> and <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">cash flow<\/span><\/span><\/span><span class=\"TextRun SCXW183949197 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW183949197 BCX0\">. &nbsp;For example, your business may be looking to capture a 5-percent average savings target within one of its <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW183949197 BCX0\">key<\/span> <span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW183949197 BCX0\">spend<\/span><span class=\"NormalTextRun SCXW183949197 BCX0\"> categories. This could mean several changes in the contract terms or the need to decide on a vendor contract renewal at the expense of other contracts. <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW183949197 BCX0\">Or,<\/span><span class=\"NormalTextRun SCXW183949197 BCX0\"> your business may wish to stay within a certain supplier <span class=\"\"  data-mobile-support=\"0\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex='0' role='link'>budget<\/span> and only extend to a third-party contract when a supplier&rsquo;s price is substantially lower than the cost of the new third-party supplier. Closed-loop procurement models are designed to give you <\/span><span class=\"NormalTextRun SCXW183949197 BCX0\">easy <\/span><span class=\"NormalTextRun SCXW183949197 BCX0\">access to the information you need to know to achieve the desired outcomes. <\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-66d98b4 elementor-widget elementor-widget-text-editor\" data-id=\"66d98b4\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"color: #ff6600;\"><strong>Read More:-<\/strong><\/span>&nbsp; <span style=\"color: #000000;\"><strong> Comprehensive Guide to&nbsp;<span style=\"color: #ff6600;\"><a style=\"color: #ff6600;\" href=\"https:\/\/simfoni.com\/supplier-diversity\/\" target=\"_blank\" rel=\"noopener\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Supplier Diversity<\/span> <\/a><\/span>in Procurement &amp; Supply Chain<\/strong><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-c3cd975 elementor-widget elementor-widget-text-editor\" data-id=\"c3cd975\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW29365724 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW29365724 BCX0\">Companies with multiple sources of <\/span><span class=\"NormalTextRun ContextualSpellingAndGrammarErrorV2Themed SCXW29365724 BCX0\">spend<\/span><span class=\"NormalTextRun SCXW29365724 BCX0\"> that want to realize <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">their maximum <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">savings potential will benefit from a closed-loop procurement solution <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">that uses<\/span> <\/span><span class=\"TextRun SCXW29365724 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW29365724 BCX0\">spend analytics <\/span><\/span><span class=\"TextRun SCXW29365724 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW29365724 BCX0\">in tandem<\/span><\/span> <span class=\"TextRun SCXW29365724 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW29365724 BCX0\">with <\/span><\/span><a href=\"https:\/\/simfoni.com\/esourcing-guide\/\" target=\"_blank\" rel=\"noopener\"><strong><span class=\"TextRun SCXW29365724 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW29365724 BCX0\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">eSourcing<\/span><\/span><\/span><\/strong><\/a><span class=\"TextRun SCXW29365724 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW29365724 BCX0\"> capabilities. These are two critical core components of the procurement function and when used together, you can easily <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">discover<\/span><span class=\"NormalTextRun SCXW29365724 BCX0\"> where <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">your best <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">savings opportunities <\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">lie<\/span><span class=\"NormalTextRun SCXW29365724 BCX0\">, and then strategically source them.<\/span><\/span><\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<div class=\"elementor-element elementor-element-75f6004 elementor-widget elementor-widget-text-editor\" data-id=\"75f6004\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span class=\"TextRun SCXW1810473 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW1810473 BCX0\">More to come on the benefits of <\/span><span class=\"NormalTextRun SCXW1810473 BCX0\">combining <\/span><span class=\"NormalTextRun SCXW1810473 BCX0\">Spend Analytics with <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">eSourcing<\/span> capabilities<\/span><span class=\"NormalTextRun SCXW1810473 BCX0\"> in Part Three of our series<\/span><span class=\"NormalTextRun SCXW1810473 BCX0\">,<\/span><span class=\"NormalTextRun SCXW1810473 BCX0\"> but in the meantime download our <\/span><span class=\"NormalTextRun SCXW1810473 BCX0\">free <\/span><span class=\"NormalTextRun SCXW1810473 BCX0\">Spend Analytics and <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">eSourcing<\/span> handbooks to learn more about the benefits the<\/span><span class=\"NormalTextRun SCXW1810473 BCX0\">se powerful tools<\/span><span class=\"NormalTextRun SCXW1810473 BCX0\"> can bring to your organization.<\/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<section class=\"has_eae_slider elementor-section elementor-top-section elementor-element elementor-element-44893cb elementor-section-boxed elementor-section-height-default elementor-section-height-default\" data-eae-slider=\"3856\" data-id=\"44893cb\" data-element_type=\"section\" data-e-type=\"section\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t\t\t\t<div class=\"elementor-container elementor-column-gap-default\">\n\t\t\t\t\t<div class=\"has_eae_slider elementor-column elementor-col-100 elementor-top-column elementor-element elementor-element-31dfe52\" data-eae-slider=\"68941\" data-id=\"31dfe52\" data-element_type=\"column\" data-e-type=\"column\" data-settings='{\"pix_scale_in\":\"none\"}'>\n\t\t\t<div class=\"elementor-widget-wrap elementor-element-populated\">\n\t\t\t\t\t\t<div class=\"elementor-element elementor-element-02f5c7f elementor-widget elementor-widget-text-editor\" data-id=\"02f5c7f\" data-element_type=\"widget\" data-e-type=\"widget\" data-widget_type=\"text-editor.default\">\n\t\t\t\t\t\t\t\t\t<p><span style=\"color: #008080;\"><strong><span class=\"TextRun SCXW197621291 BCX0\" lang=\"EN-US\" xml:lang=\"EN-US\" data-contrast=\"auto\"><span class=\"NormalTextRun SCXW197621291 BCX0\">Download the <a href=\"https:\/\/simfoni.com\/spend-analytics\/what-is-spend-analytics-why-and-how-it-is-implemented\/\" target=\"_blank\" rel=\"noopener\"><span style=\"color: #ff6600;\">Spend Analytics<\/span><\/a> and <a href=\"https:\/\/simfoni.com\/esourcing-guide\/\" target=\"_blank\" rel=\"noopener\"><span style=\"color: #ff6600;\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">eSourcing<\/span> handbooks<\/span><\/a> today!<\/span><\/span><\/strong><\/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<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>In our last post, we discussed adopting <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">spend under management<\/span><\/span> (SUM) and the first of the five principles: <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Spend Under Management<\/span><\/span> Part One: Connecting Procurement to Your Core Business <span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\"><span class=\"\" data-mobile-support=\"0\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Spend Under Management<\/span><\/span> Part Two: The 5 Key Principles of Proper&hellip;<\/p>\n","protected":false},"author":1,"featured_media":48515,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"footnotes":""},"categories":[528],"tags":[2702,467,458],"class_list":["post-48512","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spend-management","tag-business-spend-management","tag-spend-management","tag-tail-spend-management"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Spend Management Part 2:\u00a0 The 5 Key Principles of Proper Spend Management<\/title>\n<meta name=\"description\" content=\"The Part Two of our blog series \u201cSpend Under Management\u201d discusses these principles and how you can implement the framework within your organization.\" \/>\n<meta name=\"robots\" content=\"index, follow, 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