{"id":10398,"date":"2019-09-17T18:42:47","date_gmt":"2019-09-17T16:42:47","guid":{"rendered":"https:\/\/sourcing-force.com\/?p=10398"},"modified":"2022-09-24T15:06:10","modified_gmt":"2022-09-24T13:06:10","slug":"some-spend-related-useful-definitions","status":"publish","type":"post","link":"https:\/\/sourcing-force.com\/en\/some-spend-related-useful-definitions\/","title":{"rendered":"Some Spend-related Useful Definitions"},"content":{"rendered":"

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I\u2019ve noticed that there are a lot of terms being used with the word \u201cspend\u201d in them.<\/span><\/strong><\/p>\n

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Oftentimes one word can mean different things to different people at different companies. In an effort to eliminate confusion, here\u2019s a central repository for Sourcing Force\u2019s definitions for all things \u201cspend\u201d related.<\/span><\/p>\n

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\"spend<\/p>\n

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Spend: <\/b><\/span><\/span><\/p>\n

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The most\u00a0<\/b>common definition for the word spend is \u201cTo pay out or expend money.\u201d <\/span><\/span><\/p>\n

It\u2019s considered a verb, however, in our industry, spend is used as both a verb and a noun. \u201cHow much do you spend on office supplies?\u201d as well as \u201cWhat is your annual spend?\u201d <\/span><\/span><\/p>\n

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Not just aggregating your spend, this refers to combining buying power in specific categories<\/a> in order to secure the best pricing and service agreements from suppliers. <\/span><\/p>\n

If you can identify that you\u2019re spending $10M with a particular supplier, you\u2019re more likely to negotiate better contract terms than if you\u2019re spending only $1M with that supplier.<\/span><\/p>\n

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Spend Analysis: <\/b><\/span><\/p>\n

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This involves the entire\u00a0<\/b>process of collecting, cleansing, classifying and analyzing<\/a> your spend with the purpose of reducing procurement costs, improving efficiency and monitoring compliance. <\/span><\/p>\n

It should be an in-depth analysis<\/a> of your spend, including the who, what, when, where and why. <\/span><\/p>\n

Who do you spend with, what do you spend on, when do you spend it, where do you spend it and why do you spend it. <\/span>(That was a lot of hanging prepositions, I know.) <\/span><\/p>\n

Companies categorize and evaluate their spend at the category or item level in order to identify areas that may offer savings opportunities. <\/span><\/p>\n

This should be an ongoing process rather than a one-time initiative.<\/span><\/p>\n

Watch this video to learn more about how to measure accuracy in Spend Analysis:<\/span><\/p>\n

 <\/p>\n