Difference between revisions 1307482 and 1311828 on enwiki

__NOTOC__
'''Spend management''' is the way in which companies control and optimize the money they spend. It involves cutting operating and other costs associated with doing business. These costs typically show up as "operating costs" or SG&A (Selling, General and Administrative) costs, but can also be found in other areas and in other members of the supply chain.

(contracted; show full) or system. This often means that a "maverick" purchase typically results in an individual or department buying an item in an ad-hoc fashion that results in paying a 20% premium for that item. Instead of buying from a preferred supplier with which the company negotiated a contract with discount pricing, an individual goes outside the normal process and purchases that same item at retail.

:This is often hard to enforce unless some control mechanism (often technological), is put in place that:

**:: 1) prohibits this type of purchasing
**:: 2) sets up penalties for these types of purchases
**:: 3) puts into place some type of approval or check and balance system.

*'''Increase of spend economies of scale''' -- By directing more spend toward a particular supplier, a company can negotiate more favorable pricing based on how much money it spends with that supplier in a given year. Many companies may purchase like items from many suppliers at different prices. By consolidating this "spend", and directing it toward 1 or a few suppliers, companies are able to g(contracted; show full)

:The e-sourcing of direct items (raw materials) is often much more complex than indirect (office supplies etc) as the deciding factor is not just price but also the way the product fits into the overall manufacturing of a product.

:The way a company collaborates and transacts with their suppliers is a critical part of spend management as well. This is sometimes called "Supplier Relationship Management". This term is often incorrectly used in place of "Spend Management".

⏎


⏎

⏎
⏎

==Spend management in context==

Spend Management is a subset of Total Cost Management, which takes into consideration financial management aspects such as tax/vat, exchange rates, the impact of demand (ie: sales), manufacturing and other factors.

Spend Management when considered from a holistic viewpoint can start to feed into supply management as it also affects how assets (capitol and otherwise) and inventory are procured and managed. Spend Management (and in a bigger view Total Cost Management) starts to inform a company of Total Cost of Ownership and is often used to understand the total cost of items such as assets (from their aquisition to their use and depreciation and finally to the assets retirement).

In the end, however, Spend Management is about creating long-term and sustainable savings. True Spend Management (and by extention Total Cost Management) is considered by many to be an ongoing cyclical process.

==Lists of related topics==

* [[list of management topics]]
* [[list of marketing topics]]
* [[list of economics topics]]
* [[list of finance topics]]
* [[list of accounting topics]]
* [[list of information technology management topics]]			
* [[list of business law topics]]
* [[list of people (business)]]
* [[list of economists]]