Tail Spend / Low-Value Spend Management Posted by Simfoni November 28th, 2017

Tail Spend / Low-Value Spend Management

Quality data can enhance the success of tail spend management exercises.

Reducing overall procurement spend is a priority in many organizations. However, very often when it comes to examining spend patterns to extract savings, the focus is placed exclusively on larger, strategic spend items and categories.

While it is important to manage strategic spend well, an exclusive focus on these purchases can lead to overlooking another area of the business– small, low-value or occasional purchases usually referred to as “tail spend”, i.e. the bottom 30% or so of company purchases by value. Good tail spend management, if it is done right, can lead to significant cost savings if it is applied across the entire company.

Furthermore, the hidden costs of hundreds or thousands of employees spending time trying to source the items they require, and then processing the necessary approvals and ordering, can amount to a huge business distraction. Their time is better spent on higher value activities.

Efficient and effective low-value spend management is not simple, though. Because the purchases in this category are so diverse and may be initiated and approved by people outside of the procurement department, sometimes in far-away locations, scrutinizing and gaining control of these purchases can be very difficult.

This is where the availability of good quality data can make all the difference. Simfoni is the first company to bring a dedicated tail spend management platform to market. Our tail spend platform, Vitesse, embeds all the necessary modules required to run an end-to-end program. Key highlights of our solution include:

  • Allowing users to raise requisitions in just a few seconds – directly from their smartphone if they prefer
  • Streamlined workflow and approval processes
  • Automated triage of the purchase requests
  • Maintenance of preferred vendors database
  • Automated tendering and quotation management
  • Integration with your legacy systems for raising purchase orders

The Vitesse technology platform, backed by our specialized buying desk service, will enable you to implement and maintain a comprehensive tail spend management program.

By compelling all employees to place all incidental purchases through our platform, low-value spend management becomes a viable option. The ease of access to and visibility of ad hoc purchases generally has the effect of drastically reducing out-of-policy, “maverick” purchases, one of the key focus areas of any tail spend management program. Savings can be as much as 30-50% on the purchase cost of certain items, whilst improvement in process costs can be equally significant, too.

Simfoni is a pioneer in the introduction of automated tail spend management solutions. Contact us now to find out how we can help make your business more efficient and cost-effective.