WHAT IS SPEND MANAGEMENT?

Spend management is a process of collecting, collating, maintaining, categorizing, and

evaluating spend data to reduce procurement costs, improve efficiency, monitor and control
workflows, and regulate compliance. Spend management affects and manages various activities
across the procurement cycle. It includes requisition processing, budgeting, planning, supplier
management, contract management, inventory management, sourcing, and product
development. Every organization, regardless of their size and type, can refer to this
comprehensive discussion on spend management across departments

What is done under Spend Management?

Well, in spend management, expenses and spendings of business are managed. This whole
process is quite complicated and not as simple as it looks. The companies have to make serious
decisions regarding what to spend, where to spend, how much to spend, and how to spend in
any specific project or to offer specific services or to produce specific products. The decision
from where this money will come and how much it will offer in profit is also made under Spend
Management.

Why is Spend Management Important?

Spend management is very important because if you don’t know what, when, where, and how
your money is going to be utilized then how you will be able to make the right business
decisions. In order to keep a record of the cost and spendings and understanding which
resource is bringing more profits, the spend management is necessary. It is just like making a
budget of a home. At the start of every month, a household head makes a budget in which
spending and savings of the full month are addressed. Same is the case with business spend
management however their scale is larger.

Value Derived from Spend Management:-:

 Greater efficiency – from automating manual, error-prone processes

 Lower supply costs and risks – by knowing exactly what is being bought, from whom,
and for how much

 More effective collaboration – between trading partners and cross-functional teams

  Improved productivity – by freeing time and resources to focus on more strategic
activities

Processes digitized and consolidated

Spend management begins with the digitalization of sourcing, contracting, and purchasing
processes, along with processes for managing suppliers, invoices, and payments. These
functions are then consolidated into one simple, intelligent process carried out on a single,
cloud-based platform integrated with a digital business network. This makes it possible to
gather and analyze all spend data, gaining insight into company spending across the entire
organization