Top 4 ways to effectively manage tail spend

Procurement departments devote time, resources and energy to improve their core spend areas. However, the…...
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Procurement departments devote time, resources and energy to improve their core spend areas. However, the tail end is often overlooked. This is primarily because the sourcing department has to handle several suppliers simultaneously while searching for ways to minimise cost to the organisation. Hence, local operations teams usually end up buying what is necessary as long as they stay below the specified threshold.

Keeping a grip on tail spend can be challenging, so we have compiled a list of four tips to help your organisation enjoy significant sourcing savings.

1.

Spend analytics

Thoroughly analysing spends will allow you to identify those that are not compliant with existing agreements. Ensure each spend complies with the purchase agreements that your organisation has in place.

2.

Helpdesk for sourcing

Look to set up a single-point sourcing helpdesk to handle queries related to sourcing and purchase. All enquiries can be handled by the in-house sourcing department or supplier, as long as they fall within the ambit of the agreements and conform to the previously decided spend parameters.

3.

Use online marketplace to find the right suppliers

An integral part of strategic sourcing is using a virtual supplier marketplace to source quality materials at affordable prices. This will help in situations when sourcing locally is more expensive or when delivery benchmarks cannot be fulfilled by local suppliers.

4.

Thorough knowledge of the local supply market

Besides sourcing quality products or materials at affordable prices, you also need to have sound knowledge of the local supply market. This allows you to understand the supply network and how you can tap it to improve efficiency. You can ensure optimal tail spend management by relying on outsourcing providers to help you get access to local resources.

The bottom line

Tail-end spend management is gaining traction when it comes to sourcing. However, it is important to adhere to standardised sourcing practices. Capitalising on our tail spend management tips will help your organisation enjoy considerable savings.

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