In the context of spend analysis, what is indicated by "80% of the work volume"?

In the context of spend analysis, the phrase "80% of the work volume" typically refers to the frequency and impact of smaller transactions on overall operations. This concept is often illustrated through the Pareto principle, where it is identified that a significant portion of the workload or transactions may come from numerous smaller purchases, even though they might not account for the majority of overall expenditure.

Small transactions are numerous and collectively can represent a significant amount of work in terms of processing and administration. This means that while each individual transaction may be small, their high frequency can generate substantial workload for procurement teams. By recognizing that 80% of the work volume comes from these smaller, frequent transactions, organizations can focus on streamlining processes for these types of purchases to improve efficiency and reduce operational costs related to transaction management.

Understanding this dynamic is crucial for effective spend analysis, as it helps procurement professionals prioritize their efforts in managing and optimizing both large and small transactions within their procurement strategy.