Are we aligning procurement spend with our budget? 💫

Are we aligning procurement spend with our budget? 💫

It’s surprisingly common to find that procurement & finance don’t consistently engage in two critical practices: 1. sharing detailed budgets with procurement and 2. holding regular alignment sessions to track spend against budget.

Yet, for any business, staying on budget is crucial (=financial health).
In procurement, this means carefully tracking spending against what’s been allocated. Simply put, it’s “budget vs. spend.”

Why does this matter?
If we don’t keep a close eye on spending, we risk overspending, which leads to budget cuts.

On the flip side, underspending can mean losing valuable funds.

To do this effectively:
We need to understand the financial budget, which is the money finance gives us to spend.

We also need to forecast, or estimate, what we’ll actually spend based on things like market trends & contracts…

Then, we compare that forecast to our actual spending.

The goal is to minimize the “variance,” or the difference between what we planned to spend and what we did spend.

This process isn’t just about numbers. It’s about working closely with finance, keeping other departments informed, & building strong relationships with suppliers.

When we do this right, we control costs better, build trust, & ultimately support the company’s financial goals.

Check the deck and let me know what you think? I hope it’s useful?
(apologies, a bit long -> download the full presentation for more details & save it for later !) Thank you as usual ! 🙏