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Transforming Tail Spend: A Success Story in Procurement Efficiency

Procurement Efficiency

Managing tail spend can be a challenge for large businesses. The small, frequent purchases add up, and handling them manually takes significant time and resources. A global industrial and consumer business client faced these challenges head-on. They found it difficult to manage many low-value goods and services. The headaches of dealing with numerous small suppliers also grew over time, adding complexity to their procurement process.

The internal costs of handling tail spend were often out of proportion compared to the value received. This imbalance prompted the client to seek a better solution. They needed to reduce the time spent on sourcing and managing these small purchases. Their goal was to reallocate valuable time and resources to more critical areas of the business. Adopting an easy-to-use platform that could streamline these processes became a priority.

CollectiveSpend provided the perfect solution with their Tail Spend Management and Buying Desk service. This comprehensive approach not only streamlined their procurement process but also resulted in significant cost savings. With an easy-to-use platform and consolidated invoicing, the client was able to manage their low-value requirements efficiently. This case study explores the challenges faced by the client, the solutions implemented, and the benefits realized from improved tail spend management.

Challenges Faced by a Global Industrial and Consumer Businesses Client

A major challenge for the client was the manual process needed to source low-value tail spend goods and services. These tasks took much time because every small purchase needed careful monitoring and handling. Each new item or service request forced procurement teams to start a new sourcing effort, slowing down operations.

Another problem was managing many small suppliers. Each supplier required separate contracts and management, which ate into valuable time. The procurement team had to monitor multiple suppliers for their performance, leading to inefficiencies and complications in the supply chain.

The third major challenge was the cost of managing tail spend versus the value received. The process of handling each small transaction often costsmore in terms of time and resources than the value of the transaction itself. This created an unfavorable cost balance and strained internal resources. The client needed a solution that could reduce these inefficiencies and make managing tail spend more cost-effective.

Objectives of Tail Spend Management Improvement

The primary objective was to reduce the time spent on sourcing and managing low-value requirements. By cutting down on manual processes, the client aimed to streamline operations and free up valuable time for more critical business areas. Simplifying the procurement process was a key focus in making this possible.

Another objective was to reallocate time and resources spent on low-value requirements to bigger business-critical areas. The client wanted to ensure that their procurement team could focus on strategic, high-value activities rather than getting bogged down by smaller, routine tasks.

The client also aimed to adopt an easy-to-use digital platform similar to Amazon. Increasing automation within their procurement process was crucial to achieving efficiency. They wanted to implement a system that was simple for end users, reducing the need for procurement involvement in every small purchase.

Lastly, increasing cost savings and improving payment terms were essential. By aggregating their purchasing power, the client sought better pricing and terms from suppliers. The goal was to make the procurement process more efficient and cost-effective, leading to improved financial performance.

Implementing CollectiveSpend’s Solutions

The global client adopted CollectiveSpend’s Tail Spend Management Platform and Buying Desk service to address their challenges. The solution included implementing a digital platform that streamlined the entire procurement process. This allowed the client to manage their low-value purchases more efficiently.

With the CollectiveSpend Management Platform, the client gained access to a variety of catalogs for goods and services. This made it easy for end users to find and purchase what they needed without procurement’s involvement. The Buying Desk service handled non-catalog items, ensuring quick and efficient sourcing.

Consolidating invoicing and payments was another key element. Instead of dealing with multiple suppliers and invoices, the client received a single consolidated invoice. This simplified the accounts payable process and reduced administrative workload. Additionally, punch-out integration with the client’s global procurement solution (SAP Ariba) ensured seamless workflow and streamlined transactions.

Benefits Realized from Improved Tail Spend Management

The improvements were significant. One of the most notable benefits was having a single point of contact for all procurement requirements. This drastically reduced the internal time spent on managing processes and suppliers. The streamlined approach enabled employees to focus on more critical tasks.

Consolidated invoicing and payments led to less administrative work and a simpler account processing system. Moreover, cost savings were achieved through volume aggregation. By buying in bulk through a single platform, the client could negotiate better pricing and terms with suppliers.

The introduction of a self-service system for employees meant that procurement teams were no longer bogged down by every small purchase request. Supplier performance and catalog management were handled by CollectiveSpend, reducing complexity. Additionally, there was no need to onboard multiple small suppliers into the ERP system, as everything was consolidated through CollectiveSpend. Access to pre-negotiated contracts and vetted suppliers further streamlined procurement and ensured reliability.

The clientโ€™s Procurement Manager has given good feedback regarding CollectiveSpend, saying, โ€œHaving CollectiveSpend Tail Spend Management Platform and their Buying Desk service in place has provided us a streamlined and cost-efficient way to manage all low value requirements without having to go out to the market tying up resources each time. Their ability to also source any non-catalog products and services has reduced cycle times due to their experience and network in the market.

We would be happy to recommend CollectiveSpend to anyone wanting to reduce headaches on tail spend.”

Conclusion

The global industrial and consumer business client transformed their approach to tail spend management with our solutions. The system implemented not only streamlined procurement but also provided substantial cost savings and efficiencies. By addressing key challenges and objectives, the client optimized their resources, allowing them to focus on more strategic initiatives.

As you look to manage your tail spend more effectively, consider implementing similar solutions. We offer the tools and expertise needed to streamline your procurement process, reduce costs, and improve overall efficiency.

Ready to unlock efficiency and savings in your tail spend management system? Partner with CollectiveSpend and experience the benefits firsthand. Contact us today to learn how we can help you transform your procurement strategy.



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