Addressable spend is the portion of organizational expenditure that procurement can realistically influence through sourcing, negotiation, policy, demand management, supplier decisions, or process improvement. It excludes amounts outside the team’s practical authority or unsuitable for intervention. Defining the boundary avoids applying savings targets to a spend base that procurement cannot meaningfully change.
In plain English
It is the spend procurement has a credible opportunity to influence.
Illustrative example
At Northstar Industrial Systems, procurement separates regulated pass-through charges from categories that can be sourced, consolidated, or governed.
- Related terms
- Spend analysis; Spend under management; Category strategy; Savings tracking
- Lifecycle stages
- Strategy; Source
- Stakeholders
- Procurement; Finance; Executive leadership