Inventory Management
Procurement
Method Pay
Analytics & Reporting
A dental group with a dozen locations is running a dozen purchasing habits at once.
One office manager orders from a rep she trusts, another buys off a marketplace, and a third still calls the distributor by phone.
Finance sees a single number at the bottom of the statement and has almost no way to steer it.
Spend under management is the metric that measures how much of that total the organization actually controls, and for many DSOs, the honest answer is uncomfortable.
This guide covers what spend under management is, how to calculate it, what a strong benchmark looks like, and the levers a DSO can pull to raise it.
Spend under management (sometimes shortened to SUM) is the share of an organization's total spend that is actively managed and follows company purchasing policies and guidelines.
Managed spend moves through a defined process. It is sourced against known pricing, routed through approvals, and recorded in a system where someone can see it. The rest is spend that happens, gets paid, and disappears from view.
A quick note on the acronym, since it carries two meanings. In this context, DSO means Dental Support Organization, not Days Sales Outstanding, the finance metric that shares the same three letters.
For a single practice, the distinction barely matters, because one person usually sees every order. For a DSO running purchasing across many locations, the distinction is the whole game.
Spend under management can cover every supplier and category, or it can be broken out by location, region, or product group, so leadership can see which parts of the organization buy with discipline and which do not.
The calculation is straightforward. Divide the spend that is actively sourced and follows company buying policy by total spend, then multiply by 100.
Spend under management = (managed spend / total spend) x 100
Say a DSO spends four million dollars a year on dental supplies across its locations. If 2.4 million of that runs through approved suppliers, formularies, and purchase orders, and the remaining 1.6 million is placed however each office prefers, SUM sits at 60 percent.
The number is easy to compute once the underlying spend is visible. Getting the spend visible in the first place is the harder part, and it is where fragmented ordering quietly defeats the exercise.
Every dollar of spend falls into one of two camps. Managed spend follows the rules the organization set. Maverick spend, sometimes called tail spend when it is scattered across many small purchases, goes around them.
Maverick spend rarely looks like a problem in the moment. It is the assistant who reorders gloves from a familiar site because it is faster, the location that keeps buying a preferred composite that is not on the formulary, or the one-off equipment purchase that never gets a purchase order.
While none of these feel irresponsible or reckless, added up across locations and months, they separate a procurement operation that negotiates from strength from one that finds out what it paid after the fact.
The gap between managed and unmanaged spend is where a DSO loses money it never sees. It is spend that was never sourced competitively, never checked against a budget, and never available for analysis. You cannot negotiate a price you cannot see, and you cannot improve a purchase you never recorded.
Procurement leaders track a lot of metrics.
Spend under management is the one that connects most directly to the number that DSO's investors care about, which is EBITDA. The logic is direct. Spend that is managed is spend that can be negotiated, consolidated, and controlled. Every point of supply cost taken out of the business drops to the bottom line, and for a DSO, that bottom line drives both profit and enterprise value.
This is why margin improvement and spend under management move together. Our internal data shows that dental groups which bring more of their ordering under a single policy consistently capture savings that scattered buying leaves on the table.
For a DSO preparing for its next round of investment, raising SUM is one of the more reliable ways to increase EBITDA and market value, because it improves the quality of earnings rather than chasing more revenue.
Industry benchmarks put the gap in stark terms. Research has found that best-in-class procurement teams place roughly 91.5 percent of their spend under management, while the average organization manages closer to 57 percent.
That is a spread of more than thirty points between the disciplined and the average, and it maps almost directly onto savings. The same research estimates that every new dollar of spend brought under management yields 6 to 12 percent in savings. For a DSO spending millions on supplies, closing even part of that distance is a material number.
The benchmark is useful less as a scoreboard and more as a map. The distance between where a DSO sits today and where the leaders sit is recoverable margin, waiting on better process.
Raising spend under management is not about forcing every location to buy the same way overnight. It is about building a path where the managed way is also the easy way, so ordering naturally flows through the process instead of around it. Five levers do most of the work.
The single biggest source of unmanaged spend in a DSO is fragmented, location-level buying. When every office sets its own habits, the organization has fifteen procurement operations instead of one.
Centralized controls are what convert a set of independent practices into a single buying entity with real negotiating leverage.
Your catalog (or formulary) is the list of products a DSO has agreed to buy. Without one, clinical preference quietly pulls spend toward items that were never sourced or negotiated, a pattern known as formulary leakage.
Every order that stays on formulary is an order that stays under management, which is why formulary discipline and SUM rise together.
A purchase that skips approval and never checks against a budget is, by definition, unmanaged. It happened, and the organization found out later.
Budget controls turn spending from something a DSO reviews after the fact into something it steers as it happens.
Spend you cannot verify against an order is spend you are not really managing. Three-way invoice matching compares the purchase order, the receipt, and the invoice before anyone pays.
Matching closes the loop, because managed spend that is not verified at payment can still leak value on the invoice.
Normalize catalog data across suppliers so every dollar is categorizable
Spend that you cannot classify cannot be reported as managed. If the same box of gloves shows up under four different names from four suppliers, no system can tell you what you spent on gloves, and your SUM number becomes guesswork dressed up as data.
This is also where platform incentives matter.
A procurement platform that earns money from suppliers has a reason to shade the data toward those suppliers.
A vendor-agnostic platform has no stake in where a DSO buys, so its analysis can be trusted. The catalog work is what makes the analysis honest, and honest analysis is what makes spend under management a real number rather than a comforting one.
Spend under management gets confused with a few neighboring metrics. They are related, but they measure different things, and a DSO tracking procurement KPIs should keep them straight.
Category management sits alongside all of these. Grouping spend into categories, such as gloves, composites, anesthetics, and so on, is how a DSO decides where to concentrate volume and negotiate, and it is often the practical starting point for raising SUM in a specific area.
A DSO can run for years without ever asking how much of its spend it actually manages, and the number will quietly cap what procurement is able to deliver. Spend under management is a plain measure of control. It tells you how much of your buying follows a plan and how much is left to habit, and it points straight at the margin waiting in the gap.
Raising that number takes the pieces working together: centralized controls, a real formulary, approval and budget workflows, three-way matching, and a normalized catalog that makes the data trustworthy.
Method's spend management platform brings those into one system, built on a vendor-agnostic model so the analysis works for the DSO rather than for its suppliers. To see what your spend under management looks like across every location, request a demo.
What is spend under management?
Spend under management is the percentage of an organization's total spend that is actively sourced and follows company purchasing policy. It measures how much of your buying is controlled through approvals, formularies, and purchase orders, versus how much happens outside any defined process. For a DSO, it is one of the most direct indicators of how much leverage and visibility procurement actually has.
How do you calculate spend under management?
Divide the spend that follows company buying policy by total spend, then multiply by 100. If a DSO manages 2.4 million dollars of a four-million-dollar supply budget, SUM is 60 percent. The figure can be calculated for the whole organization or broken out by location, region, or category to show where control is strong and where it is weak.
What is a good spend under management percentage for a DSO?
Benchmarks from Ardent Partners put best-in-class procurement teams at roughly 91.5 percent and the average organization near 57 percent. There is no single correct target, because the right number depends on how much of your spend is addressable. A practical goal is to move steadily toward the best-in-class range by bringing more addressable spend under a single policy each year.
What is the difference between spend under management and addressable spend?
Addressable spend is everything procurement could realistically influence. Spend under management is the portion of that spend the organization actually controls today. Because some spend is not addressable, 100 percent SUM is not the goal. The goal is to capture as much of the addressable portion as possible.
Why does spend under management matter for DSOs?
Managed spend is spend that can be negotiated, consolidated, and controlled, and every dollar of supply cost removed drops to the bottom line. Because EBITDA drives both profit and enterprise value for a DSO, raising SUM is one of the clearer paths to improving margin and valuation. It improves the quality of earnings rather than relying on more revenue.
How can a DSO increase its spend under management?
Centralize purchasing under one policy, put a formulary in place, route orders through approval and budget controls, match invoices to purchase orders and receipts, and normalize catalog data so spend is accurately categorized. Each lever pulls more buying into a process where it can be seen and improved. The combined effect is a larger share of total spend that leadership can actually manage.
Does 100 percent spend under management make sense as a target?
No. Some spend, such as certain fixed costs and obligations, cannot be competitively sourced or influenced, so it is not realistic to manage all of it. The better measure is how much of your addressable spend is under management. A spend management platform that normalizes catalog data helps a DSO see the difference clearly and focus effort where it pays off.
