To maximize your procurement processes beyond their complexity, it’s crucial to measure the performance of different aspects. Breaking down performance into only significant categories helps qualify the meaning of what you are measuring, saves you time and optimizes your procurement strategy as a whole.
There are several KPIs essential to procurement, but the unofficial top five—total cost savings, cycle time and delivery, spend, ROI and compliance—should be examined above all other assessments. Here, we take a look at how to measure, consider and factor managed and total spend into how well your procurement processes are working.
Managed vs. Total Spend
Managed spend is defined as all budget spent through a managed contract with a supplier. This often takes into account all non-payroll money that a company’s management team has influence over in dictating which preferred vendors will be used and how exactly the money will be spent.
Total spend is the entirety of the budget and the consideration of how the money was invested, usually over the period of a quarter or a year. This always includes the portion of budget influenced by others than management.
Monitoring spend in all aspects of business is a top priority for decreasing expenses and increasing profits. Overseeing how a procurement budget is used is especially beneficial for these purposes.
Channeling Managed Principles
The advantages of managed spend include transparency, maximum value and better returns. If all procurement orders are going through a managed contract with a trusted vendor, you know at all times where money is being directed, allowing you to constantly reevaluate if you are getting the best value for the best returns.
A managed spend budget is easier to handle, adjust and understand when needed. If you look at your total spend and find that a large amount of the budget is being spent on non-contractual expenditures, you can channel these funds through managed relationships in the future for a better deal and more legitimate business practices. Consequently, your business operations in other areas will be positively impacted.
Channeling managed practices for your spend and your procurement strategy can be aided by a mobile procurement platform. A mobile procurement solution puts all procurement needs in one place to be accessed by any authorized user anywhere. This single-view of your procurement activities also provides the transparency needed for truly maximizing your managed and total spend.