Manage all your procurement activities
Low cost, low frequency and low value purchases often go unmanaged. This means these transactions are usually the most costly, despite their relative unimportance. But we can simplify the administration of your non-core transactions, freeing up time for better negotiations for your strategic purchases, using a tail spend management approach.
On average, companies have to devote 80% of their procurement administration work to managing the last 20% of their purchases, ordered according to value with the lowest value purchases at the end. Optimizing your tail spend management eliminates this waste of time, effort and missed opportunities, enabling you to fully benefit from your procurement department’s expertise.
More combined purchases
Optimization starts with an analysis of your purchases, using the Kraljic method, or an ABC classification (from strategic to commodity) or a Pareto analysis which compares order value with purchase volume or repetition. There are three different actions that can be combined to create solutions:
- lowering the number of suppliers through negotiations with your current strategic suppliers, so that they deliver commodities and non-core products under competitive conditions
- reducing the purchasing administration by setting up a compulsory catalogue of approved non-core products and suppliers
- selecting commodities from your procurement tail to bundle them in procurement packages from a low number of suppliers
Reduce purchasing administration
This service is part of our standard offering for customers with a long-term one-vendor agreement or could complement a strategic sourcing project. Tail spend management optimization will dramatically reduce your purchasing administration.
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Tail spend management has become increasingly important to companies worldwide. A well-thought-out strategy can increase spend visibility and significantly cut administrative costs as well as reduce the overall complexity of the procurement process.
But who’s the perfect partner to implement such a strategy? A distributor? An integrator? Or are we evolving into a hybrid model?