The Procurement Glossary » Addressable Spend

Addressable Spend

Spend & Analytics

Definition

The portion of total spend that procurement can realistically influence or manage.

Explanation

Not all spend is controllable — taxes, statutory fees and some regulated costs are not. Addressable (or influenceable) spend is the denominator for savings targets and spend-under-management metrics, focusing effort where it can matter.

Example

Of RM50m total spend, RM38m is addressable; the rest is taxes and regulated levies.

Related terms

• Spend Under Management (SUM) — The proportion of addressable spend that is actively managed by procurement through contracts, sourcing and controls.
• Spend Analysis — The process of collecting, cleaning, classifying and analysing purchasing data to understand what an organisation buys, from whom and for how much.
• Cost Savings — A reduction in the price or cost of a purchase compared with a baseline, delivered through sourcing or negotiation.
• Tail Spend — The large number of low-value transactions and suppliers that together make up a small share of total spend but a big share of effort.

Frequently Asked Questions

What is Addressable Spend?

The portion of total spend that procurement can realistically influence or manage. Not all spend is controllable — taxes, statutory fees and some regulated costs are not. Addressable (or influenceable) spend is the denominator for savings targets and spend-under-management metrics, focusing effort where it can matter.

Can you give an example of Addressable Spend?

Of RM50m total spend, RM38m is addressable; the rest is taxes and regulated levies.

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