Spend Management in the Supply Chain vs Expense Management 

Understand the difference between spend and expense management and how the two can be brought into harmony to deliver strategic control across all categories of spend. 

The Link between Spend Management and Supply Chain Efficiency 

In this series of articles we have been discussing the best practices to bring spend under management and how this is essential to identify savings, efficiencies, and other benefits such as improved sustainability. We have touched upon personal expenses such as travel and hospitality, and ad hoc software purchases, but we have not gotten to grips with it as a specific topic. 

The fact is, however, that expense management is one of those grey areas where finance, HR, and procurement overlap. It is treated differently in different sectors and between organizations within specific sectors. Many of them confuse spend management with expense management. As we shall see, this tends to be the case in sectors with the following characteristics: first, indirect spend dominates; second, client-facing activities blur the line between business and personal expenditure; and third, procurement is not seen as a strategic discipline, leaving corporate finance or individual business units to manage discretionary costs. But in all cases, it is vitally important to make the distinction because spend management in the supply chain is critical to business success as an enabler of supply chain agility, efficiency, spend visibility and cost control.  

These capabilities are especially essential in times when global supply chains face constant pressure from inflation, supplier risk, and volatility. But even in “quiet times” – which we have not seen for a while! – spend management is a source of competitive advantage. The savings achieved by bringing spend under control, consolidating spend across different locations, rationalizing the supplier base, and eliminating off-contract spend make a huge impact on the bottom line. 

Spend Management vs Expense Management: Key Differences 

In short, spend management is strategic and proactive whereas expense management is reactive. In most organizations in most sectors, spend management focuses on strategic control of procurement, sourcing, contracts, and supplier performance. By contrast, expense management focuses on employee-level costs and reimbursements. It is understandable that in some sectors there continues to be confusion between the two. These sectors, and the reason why confusion arises, are set out in Table 1. Note that best practice even in these sectors demands that expenses be brought under management with greater direct control exercised by procurement. 

With expense management control is exercised after the fact, insofar as it is exercised at all. An employee submits an expense claim after the travel, accommodation, entertainment has occurred or payment has already been made. It therefore escapes the same rigorous oversight applied to spend under management. The key differences between spend management and expense management are set out in Table 2. 

Why Spend Visibility Is Critical to Supply Chain Resilience 

Spend management concerns what the business buys to operate and thus on whom it depends. Expense management concerns what employees spend to represent the business; it is discretionary, episodic, and with no material dependency risk.  

To put it in concrete terms: a management consultancy is not concerned about how the ingredients get onto the employee’s plate or how the sheets get on their hotel bed. But a pharmaceutical company must keep a tight control over the supply of ingredients for medical products, and likewise an automotive manufacturer over the supply of sheet metal used in automotive production.  

In such cases, spend visibility supports agility and risk mitigation. It helps identify high-risk suppliers or overexposed categories, improves decision-making during disruptions or shortages, and enables data-backed cost reduction and sourcing diversification. For example, it might enable the pharmaceuticals company to identify the best multi-vendor strategy for raw materials, or enable the automotive company to respond with agility to the imposition steel tariffs.

Sector	Why the Confusion Arises	Typical Result	Best Practice
Management Consulting / Professional Services	Heavy reliance on travel, client entertainment, and billable project expenses. Consultants often treat spend as recoverable rather than managed cost.	Expense reports dominate “spend visibility,” masking supplier costs (e.g. hotels, travel agencies, subcontractors).	Integrate travel and project expenses into a centralized spend analytics platform; negotiate corporate rates and preferred suppliers.
Financial Services (Banking, Insurance, Private Equity)	High executive discretion and client hospitality budgets; large marketing and event spend outside procurement.	Poor visibility of vendor relationships (e.g. boutique advisors, PR agencies) and high policy leakage.	Align expense management tools with procurement controls; introduce category ownership for services and events.
Media, Marketing, and Advertising	Fluid project-based spend and use of freelancers; ad-hoc card purchases common.	Supplier and expense data scattered across finance, HR, and project systems.	Treat all third-party spend as part of managed supplier base; introduce spend classification and approval thresholds.
Higher Education / Research Institutions	Academics and researchers often purchase directly or claim reimbursements outside procurement.	High level of “dark spend” via expense claims and grant-funded purchases.	Introduce pre-approved supplier catalogues and integrate expense tools with procurement platforms.
Healthcare / Life Sciences	High travel and conference spend by medical reps or researchers; ethics restrictions complicate procurement oversight.	Lack of unified view across field reps, labs, and procurement.	Combine expense data with supplier risk and compliance monitoring.
Engineering / Project-Based Services	Travel and subsistence blended with project procurement; subcontractor payments occasionally treated as expenses.	Difficult to reconcile project costs and supplier performance.	Define clear demarcation between reimbursable expenses and procurement-based costs.

Table 1: Sectors Where Spend and Expense Management Are Often Confused 

Aspect	Spend Management	Expense Management
Scope	Organization-wide control of all external expenditures — direct (materials, components) and indirect (services, IT, office supplies, marketing, facilities).	Focused on employee-initiated costs, typically related to travel, entertainment, and reimbursements.
Function	Strategic: sourcing, supplier management, contracting, purchase order control, payment terms, category strategy.	Transactional: recording, approving, and reimbursing individual employee expenses.
System Ownership	Typically led by Procurement and Finance, often using integrated source-to-pay (S2P) platforms (e.g. JAGGAER One),	Typically led by Finance or HR, often using expense management software (e.g. Concur, Expensify) integrated with payroll or ERP.
Data Sources	Supplier contracts, purchase orders, invoices, spend analytics dashboards.	Employee expense reports, corporate card data, travel booking systems.
Primary Objective	Optimize total cost of ownership (TCO), improve supplier performance, ensure compliance, and maximize ROI.	Ensure reimbursement accuracy, enforce policy compliance, and simplify employee processes.
Control Mechanism	Budgeting, category management, approval workflows, supplier performance KPIs.	Policy enforcement (e.g. per diem limits, travel policies), pre-approval of trips, audit of receipts.
Visibility Challenges	Hidden or “dark” spend in tail suppliers, off-contract buys, or maverick spend.	Leakage through personal cards, late claims, or expenses outside approved channels.
Financial Impact	Strategic cost savings and risk reduction across the enterprise.	Operational cost control and compliance; limited strategic leverage.

Table 2: Spend Management vs Expense Management 

The Role of Procurement in Supply Chain Spend Control  

Procurement is the strategic driver of cost discipline, compliance, and value delivery across the supply chain. procurement teams manage spend data, supplier relationships, and sourcing processes to reduce inefficiency and unmanaged spend. Under traditional expense management, expenses escape such discipline and control, adding to an organization’s spend that is not under management.  

This is far from ideal. Even though employee expenses don’t carry supply chain risk, they do carry financial, compliance, and reputational risk, which are firmly within the CFO’s remit. Many finance leaders therefore argue for integrating expense management into the broader spend-management governance framework, even if the operational processes remain separate. The CPO and CFO will want to do this for the following reasons:  

Maverick spend 

Maverick spend occurs when employees bypass corporate purchasing channels, booking hotels, taxis, or software services directly. However, if integrated with procurement, expense data feeds into spend analytics, highlighting off-contract activity and enabling negotiation of preferred rates. Combined with policies on preferred suppliers (for example, taxi firms, airlines or hotel chains), such integration brings the spend under management. 

Fraud and abuse 

Duplicate claims, falsified receipts, or non-business expenses can slip through an expense system. But if procurement takes control, policy enforcement can be linked to supplier and category rules; anomalies flagged via AI-based spend analytics. 

Regulatory and tax compliance  

Tax authorities scrutinize T&E claims for VAT recovery and allowable deductions. A centralized audit trail across procurement and expense systems improves documentation and compliance. 

Budget control 

Travel, training, and client entertainment are often the most volatile budget categories. Combined dashboards in a platform such as JAGGAER One provide end-to-end visibility of all discretionary spend, enabling better forecasting. 

Reputation and ESG 

Overspending on travel or lavish hospitality may undermine corporate sustainability or ethical commitments. Integrated procurement data allows reporting on alignment with ESG policies such as corporate responsibility and travel-related CO₂ emissions. 

In summary, expenses should as a matter of principle be visible within total spend management, because they are a form of external expenditure that affects cash flow and compliance. In practice it is often treated as a separate operational process, for three reasons: first, it falls under employee policy and HR processes, not supplier contracts; second, the amounts per transaction are small, although cumulative totals can be material; and third, T&E tools (such as Concur, Navan and Expensify) are purpose-built and separate from procurement platforms. However, JAGGAER One can integrate these tools via APIs. So, the best practice is to include expense data in consolidated spend visibility (JAGGAER One analytics dashboards, financial forecasting etc.) but at the same time, manage it operationally under Finance/HR. 

How Technology Strengthens Supply Chain Spend Management  

Integrating Spend Data across All Systems 

Digital transformation and automation provide supply chain visibility, speed, and accuracy across procurement functions. Over the past five years, rapid advances in source-to-pay (S2P) systems, APIs, and data architecture have enabled organizations to bring far more spend under management, including areas once considered ungovernable, such as T&E.  

APIs and middleware enable the real-time data exchange between expense tools (Concur, Emburse, Navan) and procurement and ERP systems. Expense data can then flow directly into enterprise spend visibility dashboards so there is no more need for siloed expense reporting. Automated corporate card reconciliation between transactions, receipts, and policy further reduces manual work, flags policy violations, increases audit confidence. 

Moreover, with AI-driven spend analytics, machine learning classifies, cleanses, and normalizes disparate spend data sources. This enables procurement leaders and CFOs to identify “dark spend” and policy leakage across categories, including expenses. 

The Next Stage: Automation and AI Integration 

Looking ahead, automation and AI will make it easier still to close the remaining gaps between supplier-driven and employee-driven spend. For example, AI-driven anomaly detection will automatically detect policy breaches, duplicate claims, or off-contract bookings. This will reduce fraud and leakage without increasing the administrative burden. An interesting application for predictive analytics in procurement is analyzing historical spend data to forecast future travel and expense demand by business unit: this will further improve budgeting and cash-flow forecasting.  

Generative AI chatbots will also help users to select approved suppliers, plan policy-compliant trips, or justify spend decisions conversationally. In this way, procurement technology will embed compliance in advance rather than after the fact and will enable employees to comply with ESG policies and will enable their employers more easily to report business travel under Scope 3 GHG emissions. 

Final Thoughts: Building a Smarter, More Agile Supply Chain 

Advances in source-to-pay technology, open APIs, and AI-driven analytics have dissolved long-standing barriers between procurement and expense management. By integrating travel and employee spend into enterprise spend visibility, CFOs gain full financial oversight, reduce leakage, and strengthen compliance. The next wave of AI and automation will make this integration seamless, turning every transaction, from supplier invoice to taxi fare, into actionable intelligence. 

Strategic spend control means better supplier relationships, improved efficiency, and reduced risk. The challenge for many organizations is to secure these benefits across more of their expenditure by getting the maximum spend under management. JAGGAER One is the ideal platform to enable such data-driven spend management with automation, analytics, and real-time supplier insight across traditional and new spend categories, both directly and through third-party integrations with ERP and T&E systems. 

The bottom line: by merging source-to-pay, ERP, and T&E data for organization-wide analytics, procurement will deliver enterprise-wide visibility and risk insights.