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What is Spend Management?

Spend management is a process that organizations use to manage the cost, schedule, and quality of their supply chain and procurement efforts. Spend management can help organizations save money while improving the quality of their products and services. Spend management also helps ensure that products and services are delivered on time and within budget.

Spend Management Categories  

Spend management has mainly two main categories: Financial and Operational.

Financial spend management focuses on tracking and managing spending across departments and the organization. 

Operational spend management focuses on managing procurement processes and inventory levels to ensure that products and services are available when needed.

A spend management system should be able to:

  1. Identify and track the costs associated with specific purchases or procurements
  2. Plan and schedule product deliveries to achieve target deadlines
  3. Monitor and track the quality of products and services delivered
  4. Analyze performance data to identify and make improvements

Types of Spend Management  

There are many supply chain management processes, but cost segregation, accurate allocation, and material flow analysis are the most common. The system of cost segregation divides resources into various categories to be more accurately analyzed. 

The precise budget allocates resources to their most effective uses to meet customer demand while minimizing waste. Material flow analysis is the tracing of materials through the supply chain from their origin to their end user, which identifies areas of overproduction or waste.

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