Process efficiency and effectiveness
The low value, high in volume, ad-hoc and mostly urgent nature of tail spend creates disproportionate amount of noise in the business; yet delivers low value add. Beyond Sourcing Savings, it is important to address these factors so that the managers can focus on the strategic spend.
Hence why, Simfoni takes a holistic approach in our tail spend management. We not only deliver savings, we also help you reduce the noise through automation, supply base reduction, volume bundling, transaction consolidation etc.
Typically, process efficiency and effectiveness benefits further contributes ~30% reduction in operations cost.
Hard, Soft and the unrealized savings
As in most of the procurement programs, Tail spend management also delivers significant sourcing savings. Savings are typically in range of 15% on spot buys and further more when strategic levers applied over a period of time.
At Simfoni, we provide you comprehensive analytics to track and report hard and soft savings. Not only that, we further more track unrealized savings which are the lost opportunity cost of choosing a higher specification item.
Standardization, demand challenge and alternate recommendation
A large portion of purchases are made in isolation to meet individual needs. There is a high probability that business units and departments are buying the same or similar product and services, with items being over-specified by users. It is also likely that users are paying varying prices with unnecessary costs for ‘gold plated’ specifications.
The visibility of a tail spend management program help uncover such cases in your business and standardize specification or even identify an alternate product at huge cost savings.
Beyond operational effectiveness, itemization, cost savings, this also enables strategic relationship with suppliers and provides all the related benefits.
The level of tail spend reduces over time on what we term as the ‘Glide Path’, as more and more spend is addressed and moved onto negotiated agreements and catalogs
A tail spend management program’s success is in eliminating the tail spend all together and deliver sustainable solutions in managing these low value purchases.
Simfoni’s tail spend approach is designed to deliver exactly the same. Address, Compress and Ingress the low value purchases into contracts and catalogues.
Most of the tail spend thus will be part of the strategic contract negotiations leading significant cost, and value benefits.
VITESSE SOLUTIONS FEATURES
Powerful Combination of Technology, Expertise & Sourcing Network
Multi-Channel & Multi-Device
Tail Spend Diagnostics
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