How to Create a Strategic Spend Map [Free Template]

Business leaders face many challenges and many opportunities every day. If leading your organization to reduced costs and improved profitability  is a course you have chosen, developing an aggressive objective and an executable plan are essential next steps.

Developing the Plan – Strategic Spend Map

In order to create an effective and credible expense management or spend management plan, you need to start with some solid data. The development of a Strategic Spend Map combines your spend data into a tool that become the basis of your plan as outlined below. organizations buy indirect services and supplies in over 100 expense categories typically. That data should be extracted from whatever system you use and built into a spend management plan that focuses on one expense category each month. 

Strategic Spend Map [Free Template]

You’ll want to take the information you have and plot it into the template below:

Plan Template

To see this in action, here’s a sample template filled out for a dealership. Note in the example below that the category name and the 12 month spend is populated, the month (priority) is established, the due date and the individual this project is assigned to is defined as well. An estimated savings objective is also inserted in this document. If you take the time to develop this spend management plan for your organization, your odds of driving sustainable change and improved results increase considerably.

Driving Results with the Spend Map

With the plan established, now comes the critical execution or management phase. Most organizations can complete one or two expense categories per month if the management team is aligned, engaged, focused and performance driven.

Suggested Management Approach

1. Executive Sponsor – A senior leader in the organization should take ownership of the plan and provide the resources, encouragement and focus to keep the plan on track
2. Engaged Resources – Leadership should identify and select resources (Category Owners) that are motivated, capable and excited to be part of this strategic initiative to reduce costs and improve profitability.
3. Strategy – Each expense category warrants a strategy unique to the category. This might mean going out for quote (RFQ), it may mean renegotiating with an incumbent supplier, it may mean learning more about changes in the marketplace and going out for a Request for Proposal (RFP). In any event, a strategy should be defined by category.
4. Monthly Management Meetings – Leaders should gather all resources (Category Owners) on a monthly basis to discuss the progress with respect to sourcing, quoting, renegotiation and implementation, including the challenges and wins.
5. Recommendation Meetings – To ensure engagement and buy-in from management and organization influencers, the Category Owner should present a summarized version of the recommendation for that category, including current spend, savings estimates, implementation dates, etc. and all service and support implications for feedback and potential course adjustment.
6. Scorecard Tracking – The planning tool you develop can easily double as a scorecard or tracking and management tool. This document becomes an effective planning, tracking and management tool and helps you keep score and understand how you are progressing against your plan.

Final Thoughts

Organizations that choose to lead in the expense arena, who choose to manage their indirect spend, will be amply rewarded for their efforts. Most organizations will spend at least 5% of their total sales on the purchase of indirect services and supplies. A well developed and executed spend management plan can contribute 10-20% savings on a sustainable basis. Additionally, innovative leaders will expand the focus of their initiatives beyond just costs savings, to multiple objectives that involve simplifying processes to save time, controlling processes to reduce risk and more.

If you are planning to undertake this effort to get your spend management function set up and running correctly, you do not have to go it alone. StrategicSource’s Profit Improvement program help you identify areas for improvement long-term.