Think You've Got Spend Under Management? Think Again.

Every organization likes to believe it's got a handle on its spend. IT? No problem. Marketing? You bet. Telecom? It's all under control.

In his years as a spend management consultant, Brian Seipel has learned that just about every Procurement professionals thinks they've done their due diligence. On this week's episode of the Source One Podcast, he discusses an unfortunate truth. These Procurement pros, he suggests, are often mistaken.

Oftentimes the process of bringing spend under management is really a matter of saying, "out of sight, out of mind." With Marketing spend, for example, an organizations might carry out "brand-wide strategies" without "searching for the agency best suited to see them through. 

Seipel places some of the blame on ambiguous definitions. He offers the typical working definition for spend under management, "any spend under active control by Procurement." While this is an appealingly simple way of addressing the issue, it doesn't actually tell Procurement much about the process of managing its spend.

He sets about developing a more useful definition for this all-important Procurement metric.

To determine whether spend is truly under management, Seipel encourages Procurement teams to ask themselves four questions:

• Is the spend properly sourced? 
• Is the spend covered by contract terms? 
• Is the spend audited regularly? 
• Is the spend analyzed and reviewed? 

As a concluding note, he reminds listeners that it's dangerous to consider this process a one-off. "Make no mistake," he says, "this needs to be a cyclical process." When it comes to bringing and keeping spend under management, Procurement's work is never done.

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