Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

8 Best Practices of Spend Under Management

Improving spend under management requires more than measuring the percentage of controlled spend, because organizations also need clear processes, reliable data, and strong procurement discipline. The following best practices show how companies can increase procurement visibility, reduce unmanaged purchases, and expand the share of spend that is strategically managed.

1. Improve spend visibility across the organization

A strong spend under management program begins with clear visibility into what the company is buying, from whom, and through which channels. Spend visibility helps procurement identify unmanaged purchases, duplicated suppliers, fragmented demand, and categories with weak control.

To improve visibility, organizations need to consolidate spend data from multiple systems and standardize it into one usable view. When procurement has reliable and detailed spend data, it can make better sourcing decisions and bring more purchases under formal management.

2. Define clear ownership of managed spend

Spend under management improves when it is clear which categories, suppliers, business units, or regions fall under procurement responsibility. A defined ownership model helps separate managed spend from unmanaged spend and reduces confusion about who is accountable for sourcing, contracting, and supplier oversight.

This practice also supports more accurate KPI tracking because procurement can measure progress by category or business unit instead of relying only on one company-wide number. Clear ownership makes it easier to identify control gaps and expand procurement influence in a structured way.

3. Standardize procurement processes and policies

Standardized procurement processes make it easier for employees to follow approved purchasing channels. When requisitions, approvals, sourcing steps, and contract workflows are consistent, more spend flows through procurement instead of bypassing it.

Clear policies also reduce process variation across departments and create stronger compliance with procurement rules. This consistency increases control over spend and helps procurement capture a larger share of purchases within formal management structures.

4. Reduce maverick and off-contract spending

Maverick spending is one of the biggest barriers to high spending under management because it occurs outside approved contracts, suppliers, or procurement processes. When employees buy off-contract or outside the standard workflow, procurement loses visibility, leverage, and control over that spend.

A best practice is to make compliant buying easier than non-compliant buying. Accessible purchase-to-pay processes, user-friendly buying channels, and stronger policy enforcement can reduce off-contract purchases and gradually move more spend into managed pathways.

5. Consolidate spend and supplier demand

Spend fragmentation often prevents procurement from managing a larger share of the company’s expenditures effectively. When similar purchases are spread across many suppliers, departments, or locations, the organization misses opportunities to consolidate demand and negotiate better commercial terms.

A better approach is to aggregate comparable spend and direct it toward selected suppliers or contracts where possible. Consolidation strengthens procurement leverage, improves oversight, and makes it easier to move disconnected purchases into managed spend categories.

6. Strengthen category management

Category management is an important practice because spending under management grows when procurement manages spend strategically by category rather than handling purchases only on a transactional basis. A category-based view helps teams understand demand patterns, supplier structure, market conditions, and sourcing opportunities in greater detail.

With stronger category strategies, procurement can prioritize the categories where unmanaged spend is highest, or where value potential is greatest. This makes SUM improvement more targeted and helps procurement expand control where it can have the strongest business impact.

7. Use accurate spend classification and data cleansing

Spend under management is only as reliable as the data behind it. If supplier names are inconsistent, categories are misclassified, or transactions are scattered across systems, procurement cannot measure managed spend accurately or identify where improvement is needed.

That is why data cleansing, supplier normalization, and consistent classification are essential best practices. Clean and structured data allows procurement to calculate SUM correctly, detect unmanaged areas faster, and support better sourcing and compliance actions.

8. Track SUM regularly and use it as a management KPI

Spend under management should not be treated as a one-time calculation. It is more useful when monitored regularly as a procurement KPI, both at the overall level and by business unit, region, or category.

Regular tracking helps procurement see whether process changes, sourcing actions, and compliance efforts are actually increasing managed spend over time. It also turns SUM into a performance tool that supports continuous improvement instead of being just a reporting metric.

The 5 Challenges of Spend Under Management

The 5 Key Benefits of Spend Under Management

Why is Spend Under Management Important

Spend under management is important because it helps organizations reduce costs through stronger purchasing discipline, improve supplier negotiations by consolidating demand, and strengthen compliance by limiting unmanaged or off-contract buying. It also increases visibility and control over how money is spent across functions and locations, which supports better decision-making, risk management, and performance tracking. In practice, higher levels of spend under management often indicate a more mature procurement function, but they should be interpreted together with other indicators such as realized savings, supplier performance, and process efficiency.

Industry benchmarks show that spend under management varies by sector due to differences in spend structure, regulation, and procurement complexity. Manufacturing commonly achieves around 70–80% (top performers 85–90%) because direct materials are easier to centralize and manage. Services often range between 60–70% (top performers 75–85%) due to decentralized and diverse purchasing needs, while the public sector typically sits around 50–60% (top performers 65–75%) because of regulatory constraints and approval processes. Retail is frequently 65–75% (top performers 80–85%) thanks to centralized buying for resale, although indirect spend can remain harder to control. Healthcare often falls between 55–65% (top performers 70–80%) due to mixed central and local purchasing, and technology commonly reaches 65–75% (top performers 80–90%) because of more advanced procurement processes.

Conclusion

Spend under management is a valuable procurement metric because it shows how much company spending is actively controlled through structured procurement processes. A higher level of SUM usually reflects better spend visibility, stronger compliance, and greater ability to capture savings through sourcing and supplier management. It also helps organizations reduce unmanaged purchasing and strengthen overall procurement performance. For that reason, SUM is not only a reporting metric but also an indicator of procurement maturity and business control.

At the same time, improving spend under management requires more than simply applying a formula. Organizations need clear definitions, aligned data, standardized processes, and continuous monitoring to expand the share of spend that is truly managed. Best practices such as reducing maverick spend, improving spend classification, and strengthening category management can significantly support this goal. When tracked regularly and supported by the right processes, SUM becomes a practical tool for driving long-term procurement improvement.

I created a free, downloadable spend analysis template. This includes an editable Excel template and a PowerPoint presentation to help you record and analyze your spending data. I even created a video where I’ll explain how you can use this template.