Procurement Glossary
Spend under management: definition, process steps and strategic importance
November 19, 2025
Spend under management refers to the proportion of company expenditure that is actively managed and controlled through structured procurement processes. This key figure shows what percentage of the total purchasing volume is strategically managed and thus enables cost savings and risk minimization. Find out below what spend under management means, which process steps are required and how you can use this key figure strategically.
Key Facts
- Measures the share of strategically managed expenditure in the total purchasing volume
- Typical target values are between 70-90% of the total spend volume
- Increases transparency and control over procurement activities
- Enables systematic cost savings and risk minimization
- Requires structured categorization and continuous monitoring
Contents
What is spend under management? Definition and objectives
Spend under management comprises all expenditure that is actively controlled by defined procurement guidelines, contracts and processes.
Core elements of the managed spend
Strategic expenditure management is based on several pillars:
- Contractual supplier relationships
- Defined procurement processes and approval procedures
- Category management with clear responsibilities
- Continuous monitoring and reporting
Spend under management vs. maverick buying
In contrast to uncontrolled spending (maverick buying), managed spend follows clear rules. While maverick buying often leads to higher costs and compliance risks, spend under management enables systematic optimization through ABC analysis and structured supplier evaluation.
Importance of spend under management in Procurement
This key figure acts as a central indicator of the maturity and effectiveness of the procurement organization. A high proportion of managed spend correlates directly with better adherence to deadlines and reduced procurement risks.
Process steps and responsibilities
The implementation of spend under management requires a systematic approach and clear responsibilities.
Spend analysis and categorization
The first step involves the complete recording of all expenses and their categorization. Spending is structured according to Categories, suppliers and business areas. The catalog quota helps to identify the proportion of standardized procurements.
Strategy development and implementation
Specific procurement strategies are developed for each category of expenditure. This includes
- Supplier selection and evaluation
- Contract negotiations and framework agreements
- Definition of procurement processes
- Implementation of control mechanisms
Monitoring and continuous improvement
Regular monitoring is carried out using KPIs such as contract compliance and catalog compliance. Deviations are systematically analyzed and countermeasures are initiated.
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Important KPIs and targets
The success of spend under management is measured using specific key figures that reflect various aspects of spend management.
Spend coverage metrics
The share of managed spend is measured as a percentage of the total volume. Target values vary depending on the industry and maturity of the organization. In addition, the order rate per catalog shows the use of standardized procurement channels.
Process efficiency indicators
The PO Cycle Time and Requisition Cycle Time measure the speed of the procurement processes. Shorter throughput times with consistent quality indicate successful process optimization.
Quality and compliance key figures
The three-way match rate and invoice error rate evaluate the process quality. High match rates between order, delivery and invoice indicate effective controls.
Litigation risks and countermeasures for spend under management
The implementation of spend under management entails various risks that can be minimized by taking appropriate measures.
Compliance and control risks
Incomplete process documentation and a lack of employee training can lead to deviations from the rules. The complaint rate increases if quality standards are not adhered to. Regular audits and training programs are essential for minimizing risk.
Supplier dependencies
Excessive concentration on a small number of suppliers increases the risk of default. A balanced supplier strategy with alternative sources of supply reduces this risk. Continuous monitoring of on-time delivery helps to identify risks at an early stage.
Technology and data risks
System failures or data quality problems can impair spend transparency. Robust IT infrastructure and regular data validation are necessary. Backup systems and manual fallback processes ensure continuity even in the event of technical disruptions.
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Practical example
A medium-sized mechanical engineering company implemented spend under management for its indirect materials. First, the company analyzed all spend from the last 12 months and Categories it by Categories. Framework agreements were concluded with preferred suppliers for the largest categories and an electronic ordering system was introduced. After 18 months, the managed spend share increased from 45% to 78%, while procurement costs decreased by 12%.
- Complete spend analysis as a starting point
- Step-by-step implementation according to priorities
- Continuous monitoring and adjustment of the strategy
Current developments and effects
Digitalization and artificial intelligence are changing the way companies manage and optimize their expenses.
Digital transformation in spend management
Modern technologies enable automated spend analysis and real-time monitoring. AI-based systems identify anomalies and optimization potential, which can significantly increase the touchless rate. Predictive analytics supports the proactive management of procurement risks.
Integration of ESG criteria
Sustainability is increasingly being integrated into spend management strategies. Companies are expanding their supplier evaluation to include environmental, social and governance aspects. This influences both the supplier rating and the strategic orientation of the managed spend.
Agile procurement models
Flexible contract structures and dynamic supplier networks are becoming increasingly important. Companies are increasingly relying on hybrid models that guarantee both cost stability and adaptability.
Conclusion
Spend under management is a key success factor for modern procurement organizations. Systematically managing spend not only enables cost savings, but also minimizes risk and improves compliance. Companies that manage a high proportion of their spend strategically benefit from increased transparency and a better negotiating position with suppliers. The continuous development of digital tools makes spend under management an indispensable instrument for sustainable procurement excellence.
FAQ
What does spend under management actually mean?
Spend under management refers to the proportion of company expenditure that is actively controlled through structured procurement processes, contracts and defined guidelines. This includes all expenditure that is not carried out as uncontrolled individual purchases (maverick buying) but is strategically planned and monitored.
How is spend under management calculated?
The calculation is made as a ratio between managed spend and total spend: (managed spend / total spend) × 100. Managed spend includes all procurement via established supplier contracts, catalogs and approved processes. Typical target values are between 70-90% of the total volume.
What are the advantages of a high spend under management share?
A high proportion of managed spend leads to better cost control, reduced procurement risks and increased transparency. Companies benefit from volume discounts, standardized processes and improved compliance. In addition, it enables strategic supplier development and systematic cost savings through bundled negotiating power.
What challenges arise during implementation?
The main challenges are employee resistance to new processes, complex data integration and the balance between control and flexibility. Change management, comprehensive training and gradual implementation are critical to success. Technical integration of different systems and the definition of clear responsibilities require careful planning and sufficient resources.
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