Month: October 2018
Spend Management is a vital element of Supply Chain Sustenance and Effectiveness. The management of spend in an organization falls under the Mandate of its Finance and Procurement Functions.
To elaborate, the mandate of the Procurement Function is threefold:
- Management of Spending
- Supporting of Operations
- Protection of the organization from Risk
One Key Performance Indicator of the Procurement Function is the Total Cost of Ownership (TCO). TCO is calculated by adding the contracted price of a product or service to cost incurred by the supplier creation of delays, defects, rework and non-value add steps. Supplier generated delays, causes of rework, shipment of defects, force non-value-added work are major sources of procurement risks.