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Posted At : November 30, 2004 11:05 AM
Related Categories: Spend Management

Companies large and small agree that spend matters. And for many organizations, it’s beginning to matter more than it used to. But why should you care? Because global competition and the need for continuous growth and increased profits require that everyone adopt a lean and mean approach to managing spend — to stay alive and get ahead.

This blog is dedicated to everyone that wants to gain insight into Spend Management. We’ll dig into the techniques, the "secret" tools of the trade, the technology, and its impact. We’ll take a diverse approach to exploring topics. One day we might examine the Spend Management implications of economic and trade policy. The next we might gossip about industry happenings and events. Regardless of topic, we will keep our discussion lively and on target. Because we can all agree that spend does matter.

For Traffic & Stats and sponsorship opportunities click here: Why Spend Matters? Get the PDF

- Jason Busch

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In this world of spend management, I feel that we miss one important aspect. After we have realized the "low hanging fruit" of savings concentrated within 20%-30% of supply-base rest of 70%-80% stays ignored. Partially because of the cycle-time for realization of saving can take upto 3 quarters and incremental savings year-over-year is not perceived to be that great to be paid attention to.
Stramlining the procurement process with on-going savings with total cost of ownership with pro-active mitigation of break in supply-chain must be an on-going task for a purchasing professional.

# Posted By Pramod | 5/3/06 7:35 AM

I was wondering if you had a means to figure out a company's annual direct spend? Is it explicitly stated in their financial reports or perhaps calculated from some other financial measure that they publish? Any insight appreciated. Thx

# Posted By BillH | 2/16/07 12:55 PM

Direct spend is a component of COGS, or cost of goods sold, also known as cost of sales. While you may also see some factory overhead and labor in COGS, those catagories may be broken out in the 10-K, or you could probably just use a % of COGS (or even the whole thing) as an estimate.

Get this data for your prospects at www.sec.gov

If you like this idea, you will love my soon to be published book about C-Level selling called, "Think Like a CEO - Sell to Any Company in Any Industry Better and Faster than a Harvard MBA." It will be out in September...

# Posted By Mark Kuta | 3/29/07 12:58 PM

# Posted By aprovel too love you | 6/10/08 2:15 AM

Though spend analysis and spend management is a great start for savings generation and savings realization, the approach towards it should be from top to bottom(CPO-Procurement Manager-Commodity Managers-BUyer-End User) . There was a need and hence there was a purchase. So the approach should be not to magnify any of the buyers decision but to make a concentrated approach so that they are equipped with the information and can make further decisions.

# Posted By Krishna Prashant | 6/14/08 2:57 AM

Some seven years back I came across a japanese quote which read " we live by sales and make profit by purchase".

# Posted By Krishna Prashant | 6/14/08 3:01 AM

I agree that spend does matter. However, it suffers from the "I am a practitioner; hence it is (and I am) very important." The results of this are very clear: GM, Ford, Chrysler, Circuit City and others in the news utilize highly aggressive spend reduction programs, but these companies are (still) heading South because procurement does not control the requisite market forces, e.g., consumer demand, credit markets, etc. As you can see from Circuit City, Linens and Things and others in The Deal and Bankruptcy News it is NOT about how well your spend matters. Spend is important, and it does, of course, matter - and as long as our economy spirals down it matters more. As with any group of practitioners, they veiw their skill sets and contribution as highly significant and very impactful. If that were the true case of spend management, our daily news reports would not be so dismal. Bottomline, spend does matter but it cannot correct for dominant market forces not in its sphere of influence.

# Posted By Steve Sussman | 11/13/08 7:21 AM

Just to inform you all about a new networking website in line with "spend does matter".

It is dedicated to the purchasing activity it focuses on purchasing benchmarks directly between buyers: http://globuyteam.com

# Posted By Yanncik bohrer | 12/12/08 12:58 AM

Hi,

Good day!

I am keen to find out more about advertising opportunities on your blog. Please get back to me at: sereneong@globalsources.com

Thanks!

Regards,
Serene

# Posted By Serene | 5/7/09 12:14 AM

Unfortunately with the economic downturn a Financial Director can be too busy to oversee all areas of supply so many have left responsibility and decisions like this to office managers or receptionist. Many are not open enough or truly understand the advantages that are now available.

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# Posted By You Could Save | 10/15/09 6:23 AM

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