Tail End Spend Management - presented by Olivier Chalon

TAIL END SPEND MANAGEMENTPresented by Olivier Chalon

© 2014 Xchanging plcTail end spend management

AGENDA

2

1 What is tail end spend?

3 Challenges and best practices

Why is it important?2

© 2014 Xchanging plcTail end spend management3

WHAT IS TAIL END SPEND?Traditional spend management covers only 83% of an organisation’s spend.Source : CAPS Research – Cross-industry report on standard benchmarks (2012)

Tail-end spend usual characteristics :– Unadressed by the procurement team (under the radar)

– Large (and growing) number of suppliers

– Misclassified spend – we don’t really know what is bought

– Large number of small transactions

– Spot buys

– Maverick spend (non compliant)

– Fragmented spend – each company entity is buying for itself only

– Low volume, low-price items (tail of the tail)

Percentage of spendPercentage of vendors

80

80 20

20Traditionally managed spend

Tail-end spend

Source : “Betting on tail spend to save coins” Everest Group 2014


WHY IS IT IMPORTANT?

TSM can generate savings between 15% and 17%– So for an organisation generating 8% savings on its strategic spend, TSM

can potentially add up to 50% savings globally

– Where do these savings come from?• Spend reclassification and vendor consolidation• Compliance and demand management• Automated processes (eRFx, P-card & e-catalog can reduce operational cost)

TSM can help mitigate risks in the company spend– Supply disruption

– CSR issues

– Business ethics, fair practices etc



CHALLENGES AND BEST PRACTICES

Finally, experience shows that in order to promote adoption and reap the full benefits from TSM, a significant portion of the delivery team has to be local. A quick turnaround time and a deep knowledge of the supply market are prerequisites to a successfull TSM programme.

Despite the huge potential, organisations find it difficult to manage their tail-end spend.


Challenges in Tail spend management

Industry best practices

Poor data quality and visibility

Technology-focused solution implementation

Fragmented nature of spend with disparate stakeholders, technology landscape and lack of compliance

Stakeholder alignment, change management and effective compliance

High cost, seemingly low savings potential and lack of management interest

TCO approach to business case creation

Lack of dedicated team and expertise

Utilisation of third-party expertise and global best practices

THANK YOU

For more information please contact:

Olivier ChalonPhone +33 (0)1 70 39 70 61 Mobile +33 (0)6 13 66 48 06Email [email protected]

Website www.xchanging.com

Presentations & Public Speaking

Tail End Spend Management - presented by Olivier Chalon