Tag: spend management

tail spend

Tail Spend Management: How is it Helping Companies to Achieve Significant Cost Savings?

Until recently, not many companies considered it an intelligent idea to extract savings from the low-volume purchases in “tail spend”. They didn’t even consider optimizing tail spend to be worth the efforts.  However, the equation is changing nowadays, especially for companies who haven’t handled tail spend earlier, there is a scope of leveraging of 5-15% savings in this spend category.

But unfortunately, companies don’t manage tail spend with the same diligence as they manage their core spend. Many times, they neither watch sourcing market trends nor do they try renegotiating with suppliers for better pricing. Thus, leaving their hard-earned money on the table and missing out a substantial amount of savings.

At SpendEdge, we understand the importance of a tail spend management process in achieving substantial cost savings. Therefore, in this blog, we are compiling the key benefits that companies should look to achieve while managing the spend.

Improving tail spend management can result in substantial cost savings. Request a free demo and know how our experts can guide you with their tailor-made solutions.

Benefits of managing tail spend

Reduces prices

The most visible benefit of managing tail spend is price reduction. As companies increase their strategically managed spend, they can achieve a one-time savings of approximately 10-15% when addressing this spend the first time and  2-5% per year in savings thereafter.  Therefore, it is advisable for companies to strategically manage atleast 80 percent of their total spend.

Increases efficiency

Consolidated supplier base decreases the number of suppliers to be dealt with and enables procurement experts to focus on contracts that add more value to the business. Increased catalogue coverage and self-service procurement are a few other ways of enabling procurement experts to invest their time in value-added activities. This improves visibility into the procurement process that can be achieved through tail spend management and results in productivity gains for procurement functions, considerably.

Wondering how tail spend management can impact the efficiency and cost savings of your organization?

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Improves compliance

Tail spend management improves visibility to drive compliance on multiple fronts. Built-in controls ensure that the suppliers onboard undergo on- and off-boarding procedures, thus enforcing all HR and security policies. Supplier payments are managed to according to the contracted norms and for every phase of the project, enforcing all rates, performance metrics, and process approvals. Tail spend management process further helps to reduce risk, while a more transparent procurement process helps with fraud prevention and detection.

How we can manage tail spend?

Since the lack of data of visibility happening due to reasons such as siloed subgroups within the same organization, decentralized policies, and high numbers of vendors makes it difficult for organizations to manage their tail spend, we have broken down the process into three easy steps:

Identifying spend:  As tail spend includes everything from maverick spend to small purchases, it’s crucial to define the spend happening within the organization.

Streamlining process: Having a centralized process that can maintain the flow of data and money, enable companies to make better payment terms with suppliers and identify strategic buyers.

Utilizing data: Organizing, classifying and analyzing spend data allows companies to gain greater spend awareness, informed purchases and decisions.

Managing tail spend can be a herculean task for companies. Get in touch with our experts and know how we can assist you in managing the same. 

 







tail spend management

Tail Spend Management Helped a Global Consumer Goods Company to Increase Productivity of their Procurement Functions

The Business Challenge

The client, a global consumer goods company, was consistently facing challenges in managing low-value and high-volume orders. Their poor supplier onboarding processes, decentralized procurement models, and ineffective internal stakeholder relationships were increasing complexities and resulting in excess spend. This compelled the client to collaborate with SpendEdge to enhance procurement efficiency and spend visibility to capture incremental savings quickly. The key objectives they were looking to achieve through better tail spend management were:

  • Improve visibility into purchases.
  • Consolidate the number of suppliers.
  • Analyze and address the prime reasons of tail spend.

 

Formulating tail spend management strategies can help companies to reduce the cost of the procurement process? Request a free proposal and access our complete portfolio of tail spend management solutions.

Solutions Offered

The experts at SpendEdge assessed various dimensions of tail spend such as category, transactional, suppliers, geography, and business units to identify potential cost saving opportunities for the client. They also identified business needs, implemented tested tail spend management methodologies, and devised effective strategies to recognize savings in their tail spend.

The tail spend management framework devised by professionals, standardized the disparate procurement process by establishing an efficient delivery model. This helped improve the tail spend management process and further aided in the identification of additional strategic sourcing opportunities for the company. The enhanced tail spend management process also enabled category managers to focus on key suppliers and reduce the number of tail-end suppliers. This helped the company to increase catalog coverage and focus on larger contracts that add more value to the business.

Want to implement an effective tail spend management framework?

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Key Findings

In a span of six months, the productivity of the company increased by 20% for their procurement functions. Additionally, the tail spend management services allowed them to control, monitor, track transactions, and prevent excess spend occurring in the purchasing process. This enabled them to better manage their total spend apart from complying with changing policies and contracts.

What is Tail Spend and How Can We Manage it?

Tail spend, or low value spend, is usually refers to the 20% of non-core transactions that lie outside the main strategic purchasing strategies. It is usually left unmanaged due to the high volume of suppliers and inadequate resources. However, the increasing pressure on cost reduction and sustained savings through purchasing are making tail spend management a procurement priority for businesses. Companies can also improve their tail spend management process with the help of following steps:

  • Analyzing tail spend data and classifying transaction data at regular intervals to improve spend visibility.
  • Implementing category-commodity specific sourcing levers such as contracts, spend aggregation and many more.
  • Increasing the compliance and efficiency of procure to pay process and reducing the transaction cost.

Still wondering how to increase the spend visibility? Get in touch with our experts and know how our tail spend management services can help you devise precise purchasing strategies.

 







IR35

Spend Analysis : Assessing the Current Spend and Improving Supply Chain Efficiency for a Medical Devices Company – SpendEdge

Spend Analysis Solution Transforms Finance Operations and Reduces Operating Costs

About the Client 

The client is a leading medical devices company, specializing in the development of medical devices, laboratory instruments, and diagnostic products. The company supplies devices to hospitals, laboratories, and clinics worldwide. The company has ingrained its place as a leader in the medical devices market.

The Business Challenge 

The future looks sharp for the medical devices industry. With global economic growth, innovations and an aging population that has a growing need for healthcare, revenue for medical devices is poised for growth. However, in this turbulent environment, companies that can shift their supply chain priorities and better manage spend will be able to deliver significant value. Moreover, the rising need for supply management and strategic cost management have urged players in the medical devices manufacturing space to leverage the use of robust spend analysis solutions. Spend analysis solutions help companies in the medical devices manufacturing space to identify the potential opportunities and deliver actionable insights into the spend data to generate improved ROI. The spend analysis solutions also address concerns about the maverick spends across the supply chain and help achieve superior supplier relationship efficiently.

The client, a renowned medical devices company was facing challenges in reducing the cost across the supply chain and managing their tail spend. While public spending has become endemic, the client realized the need to drive more competitive pricing. Moreover, the client’s objective was to adopt spend analysis strategies to identify and optimize their spend areas. Additionally, the client needed to streamline their supply chain management and subsequently maximize profits by leveraging SpendEdge’s spend analysis solutions.

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vendor management best practices

Spend Management Solutions: A Holistic Guide for Procurement Companies

“Only a truly integrated spend management solution can fetch value for your company and result in intelligent procurement.”

Limited supply chain visibility, poor supplier transparency, new regulations, spend creep, contract management, risk mitigation, and the growing need to do “more with less” are some of the key challenges that procurement companies face. Spend creep has become one of the biggest challenges for companies today as companies are spending extensively to stay ahead of the competitors.

Unnecessary spend happens when businesses buy additional items, products or services, from suppliers that aren’t needed. Also, it happens because of misguided bid management process, weaker supply chain management systems, and lack of auditing and spend analysis. Therefore, procurement professionals need to have the right spend management solutions to tackle these challenges efficiently and effectively.

At SpendEdge, we understand the impact that spend management solutions can have on your business. And to help companies identify latent opportunities to devise strategic plans to minimize their expenditure in every category, our team of experts have provided a comprehensive guide to spend management.

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Spend Management: Reducing Purchase Spend for a CPG Industry Client

Engagement Overview

A leading CPG industry client wanted to address the challenges emerging due to inefficient spend management. As a result, the client wanted to leverage SpendEdge’s spend management engagement to enhance spend capabilities across their supply network and drive topline revenue growth. During the course of this engagement, the spend management experts at SpendEdge devised an all-inclusive approach which consisted of primary and secondary research methodologies.

Additionally, a detailed quantitative analysis of the various spend factors across the CPG industry client’s supply network was carried out to request proposal help them identify, evaluate, and prioritize each factor contributing to indirect spends.

About the Client

The client is a leading CPG industry player in the United States.

Business Challenge

The CPG industry player was facing difficulties in enhancing their spend management capabilities across their global supply network. Additionally, the client wanted to tactically address the burgeoning nature of their inefficient spend management system.


How did SpendEdge Help the Client?

Step 1: Collected and categorized organizational spend data

Today it is essential for organizations in the CPG industry space to collect and categorize spend data from a multitude of sources supply network to efficiently identify irrelevant sources of spend. By doing so, establishments can effectively decrease and overcome the inexorable circumstances caused by an ineffective spend management system.

Step 2: Devised a flexible spend management framework that aimed at reducing the organizational and supply risks

The dynamic nature of the supply chain called for the refinement of the CPG industry client’s spend management capabilities. The development of a proactive spend management framework required a combination of measures, which included – changes to the organization’s data management structure, superior spend management strategies, and the use of advanced spend management frameworks.


Key questions answered in this spend management engagement include

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Benefits of the Engagement

With the help of SpendEdge’s spend management engagement, the CPG industry client enhanced the visibility of their supply chain processes by establishing an interconnected relationship between different tiers of the supply network. Additionally, the client developed a holistic spend management approach. The approach accounted for major changes in organizational processes, data management, and data governance, which helped them address changes in market trends including the changes in regional and global demands.

Why incorporate spend management solutions?

With the ease of availability of advanced technological solutions like spend management systems, it is now possible for organizations across the globe to bring about massive cultural transformations as a fundamental part of their business plans. Click To Tweet

Our Findings

While leading CPG industry establishments turn to robust spend management solutions to reduce purchasing spend, they also understand that a precise spend management framework relies on the reliability and quality of the underlying spend data. This case study on spend management from SpendEdge concludes that a successful spend management system must be based on a robust data management foundation.


To know more about our spend management for CPG Industry players

request proposal

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IR17

Leveraging Spend Management to Save Costs and Boost Profits in the Fast Food Industry

Engagement Overview:

The client wanted to leverage spend management to enhance spend capabilities across their supply network to drive topline revenue growth. To proactively address the challenges emerging due to inefficient spend management, the fast food industry client approached SpendEdge to devise an all-inclusive approach to spend management throughout their global supply network.

A detailed quantitative analysis of the various spend factors across their supply network was carried out to identify, assess, and prioritize each factor contributing to irrelevant spend. Using a robust spend management framework, the client was looking at devising appropriate strategies to reduce unwanted costs and inefficiency out of the supply chain. By doing so, the client wanted to gauge the impact on their bottom line and free up resources to address changing consumer predilections. 

Furthermore, to address the issues of the fast food industry client a robust three-step spend management framework was developed, it included – collection, spend data analysis, and the development of a spend management framework. Following this, the fast food industry client redesigned their spendrequest proposal management system to leverage and include proactive spend management strategies.

About the Client:

A leading fast food chain in the US. The client is a prominent player in the fast food industry with multiple branches across various geographies.

Business Challenge:

The fast food industry player was facing difficulties in enhancing the spend management capabilities across their global supply network. To help the client overcome their challenges, the experts at SpendEdge developed a three-step methodology to tactically address the burgeoning nature of an inefficient spend management system.


How did SpendEdge Help the Client:

  • Step 1: Extraction and clean-up of spend data from legacy systems

In the first step, spend data from across the client’s supply network was extracted, standardized, de-duplicated, and enriched to ensure effective spend data management. Our spend management experts followed a structured approach to develop a framework to effectively track the client’s organizational spend.

  • Step 2: Collection and categorization of organizational spend data

It is essential to collect and categorize spend data from a multitude of sources within the organization’s supply network to identify irrelevant sources of spend. By doing so, organizations can effectively reduce and overcome the inflexibility caused by an incompetent spend management system.

  • Step 3: Devised a flexible spend management framework aimed at reducing the organizational risks

The dynamic nature of the supply chain called for the refinement of the client’s spend management capabilities. The development of a proactive spend management framework required a combination of measures, which included – changes to the organization’s data management structure, spend data management strategies, and the use of advanced spend management.


Key questions answered in this spend management study include:

Fast food industry


Benefits of the Engagement

Our spend management experts helped the fast food industry client devise an effective spend management framework to diversify their sourcing strategies to and minimize the risk of catastrophic supply chain failure due to an ineffective spend management system.

Leveraging spend management enabled the fast food industry client to enhance the visibility of their supply chain processes by establishing an interconnected relationship between different tiers of the supply network. The development of a holistic spend management approach also accounted for major changes in data management, organizational processes, and data governance, which helped address changes in market trends including the changes in regional and global demands.

Why is spend management necessary?

To deal with the inadequacies of traditional spend management systems, leading fast food industry firms are increasingly recognizing the need to incorporate spend management strategies across their global supply network. Click To TweetWith the easy availability of advanced technological solutions, it is now possible to bring in massive cultural transformations through the adoption and implementation of spend management as a fundamental part of business maneuvers.

Our Findings:

While leading business establishments often turn to spend management solutions to reduce purchasing spend, they quickly realize that a precise spend management framework ultimately relies on the reliability and quality of the underlying spend data. This case study on spend management concludes that a successful spend management system must be based on a robust data management foundation.


To know more about our spend management solutions for the fast food industry
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IR30

Spend Analysis Helps a Leading Processed Meat Manufacturer to Develop Effective Category Strategies for Their Manufacturing Units

Overview of the processed meat industry

The global processed meat industry comprises of subcategories including processed lunch meat, bacon, frankfurters, dinner sausages, packaged meals, hams and processed turkey.

The global processed meat industry is expected to witness high gains in light of increasing demand for processed meat coupled with increasing disposable income in emerging countries. Additionally, the rising consumer awareness in terms of following an animal protein-rich diet and the availability of numerous varieties of processed meat in the market at lesser prices is further expected to boost the demand for processed meat.

However, our analysis of the food and beverage space shows that the processed meat industry manufacturers are facing challenges in terms of:

  • Rising costs of raw materials: The processed meat industry is continuously battling ebbs and flows. Additionally, it is difficult for players in this market to predict market volatility, which means that the pricing.
  • Innovation: For companies in the processed meat industry, it is vital to innovate if they want to stay relevant in the marketplace. Innovation and flexibility is the answer to changing consumer trends. So companies not only need to look at a variety of products and packaging sizes, but also innovation in their process facilities.

Many such factors are compelling firms in the processed meat industry to leverage the use of spend analysis solutions. Spend analysis solutions help firms identify single-sourced items and develop a robust supplier base to ensure the availability of critical items.request free proposal Not only does spend analysis provide knowledge into an organization’s procurement activities and expenditures, it also allows the organization to identify areas for process improvement and cost reduction.

The Business Challenge and Journey

Client background: A leading manufacturer of processed meat with manufacturing units spread across geographies wanted to categorize and classify spend data accurately. They also wanted to rationalize suppliers and focus not just on the quality of products supplied but ensure sustainable supply with limited risk to the enterprise.

Client issue: Procurement was a decentralized function, and this meant that the information was not centrally available and was unstructured. Every manufacturing plant and department managed procurement independently, and there was minimal transparency and lack of granularity in their data and reporting.

SpendEdge’s spend analysis experts tailored a two-step research methodology, which included qualitative and quantitative data collection methods to categorize and classify spend data accurately. The experts also collected information from a wide array of reliable secondary sources including trade shows, industry forums, and company presentations.

Client journey: The spend analysis engagement helped the client categorize spend data with supplier level data across various categories. This helped them make informed purchase decisions. Additionally, the client implemented the solution across all categories, enabling the rollout of the sourcing strategy “from buying the best product to selecting the best supplier.”

Key questions answered in this spend analysis engagement

The Results

With the help of SpendEdge’s spend analysis engagement, the renowned processed meat manufacturer gained in-depth knowledge about their spend categories and developed effective category strategies across their manufacturing units.

To know more about our spend analysis solutions

request free proposal


Request free proposal