The Three Bucket Opportunity Analysis that Reveals Hidden Cost Savings
If you have not implemented a full spend analysis program, a more actionable approach is to group expenditures into three practical buckets that highlight timing, influence, and cost saving potential. By reframing spend through these three-bucket lens, procurement can present a clearer narrative to the C suite by showing contracted, future, and non-contracted expenditures alongside the potential return on investment in each area. This approach helps leadership see where procurement cost savings and supplier cost savings can be achieved, where early involvement matters most, and how strategic sourcing support strengthens outcomes across the organization.
Spend Under Contract
Spend under contract includes all expenditures already governed by agreements. Within this bucket are renewals, expiring contracts, and items leadership may not want renewed. This is where procurement recommends category strategies, leads supplier negotiations, and introduces competition through well-structured RFPs. Procurement acts as a steward of company funds, and this bucket is often where the team can demonstrate strong financial discipline and support stakeholders with clarity and rigor. It is also where strategic sourcing support consistently produces measurable procurement cost savings.
Future or New Spending and Early Procurement Engagement
Future or new spend includes upcoming expenditures that are budgeted and approved or still awaiting approval. Early involvement allows procurement to influence specifications, shape sourcing strategies, and guide stakeholders before commitments are made. Not only does this deliver supplier cost savings, it also drives supplier value and supports better decisions. K2 Sourcing advisors have seen many reviews where teams initially expected a certain supplier to rise to the top, only to change their view once a structured and unbiased process revealed stronger options. This stage consistently benefits from strategic sourcing support because the spend is not yet locked in.
Noncontract Spend and Hidden Savings Opportunities
Non-contract spend includes expenditures occurring without any formal supplier agreement. It may involve legacy suppliers or decentralized purchasing decisions. This bucket often holds some of the largest hidden opportunities for procurement to expand influence, introduce structure, and secure meaningful savings. With the right stakeholder engagement strategy, procurement can transition this spend into managed categories and unlock significant cost reductions for the organization.
Conclusion
While this is not a traditional spend analysis, it provides a fast high level opportunity assessment that clearly highlights where procurement can deliver immediate value. By presenting contracted, future, and non-contract spend in this framework, procurement can quantify potential impact and demonstrate a clear return on investment to C suite executives. When leadership can see where savings, influence, and workload align, it becomes easier to prioritize resources and support strategic sourcing initiatives. If you would find value in reviewing how this model applies to your organization, K2 Sourcing offers a complimentary consultation and can share examples of similar analyses to help guide the process.