Spend Management Tutorial

Spend Management is the process of managing the spending by companies and enterprises. This involves controlling, optimizing and reducing the money they spend to provide the goods and services that they sell. Spend management is reducing operating and other costs associated with doing business. These costs typically assigned as Selling costs or operating costs or General and Administrative costs. These costs are also found in other areas and in other parts of the supply chain.

Typical spending by companies involves buying:

• goods or services for direct inputs (raw goods and materials used in the manufacture of products)
• indirect material (office supplies phones data),
• services (temporary and contract labor,  cleaning/security services, etc.),

Spend Management process includes:

• spend analysis
• sourcing
• procurement
• receiving
• payment settlement
• management of accounts payable and general ledger accounts.

Spend management is managing how to spend money in order to build products and services. Spend management encompass  processes such as

• outsourcing
• procurement
• e-procurement
• supply chain management

Spend management saves money by

• Reduce "maverick" spend -- Buying from outside the preferred process or system is known as Maverick Spend
• Economies of scale: By directing bigger chunk of the spending to one single preferred supplier
• Increase process efficiency by automating sourcing, procurement and payment processes

Spend management Software

• Coupa
• Ariba