In a previous post, we looked at a study undertaken by The Hackett Group, titled: The CPO Agenda: Reduce Purchase Costs, Improve Agility, and Become a Trusted Advisor, by Patrick Connaughton and Christopher Sawchuk.
This time around, we are revisiting the study from a slightly different angle and also looking at an online article published recently in CSCMP’s Supply Chain Quarterly titled, Now’s the time to manage “tail spend”, by Susan Avery.
As part of the process of putting the study together, The Hackett Group surveyed a large and diverse group of procurement professionals.
As part of the survey, 180 leading procurement specialists from influential companies were asked to list the priorities for their procurement departments for the year ahead. Three key areas emerged as the leading priorities:
- Reduce and avoid unnecessary costs – 85%
- Elevate the role of the procurement team to that of a trusted advisor – 81%
- Increase the influence of company spend – 76%
Interestingly, cost reduction has risen from second place last year to top of the list this year. Making procurement expenditure more cost-effective is obviously something that sourcing professionals are taking very seriously in the present business climate.
In the website article, mention is made of the importance of effectively managing tail spend. Also discussed is Chris Sawchuck’s view that procurement professionals can approach tail spend management from either a quantitative (paying more attention to neglected areas of spend management) or qualitative (extracting better value from currently managed spend) perspective. Presumably, in many cases a mixed approach would also work well.
The general opinion is clear– managing procurement expenditure is more important than ever for leading companies, and one of the key areas that must be addressed in order to achieve this is more efficient tail spend management.
In our opinion, when managing multiple tail-end spend programs all over the world, the key to effectiveness lies in garnering adoption from end users. The reality is that end users will always follow the path of least resistance, whether that is phoning a friendly supplier or walking down the street to a local store, and let’s face it– no one ever got fired for buying the wrong pencil! So the key to our tail spend approach is to make the requisition experience as easy as possible for the end user, and that’s why we use a proprietary mobile-enabled requisitioning tool. With our “mReq” app, users can place requests in less than 20 seconds directly on their smartphones, and we all know people love using their phones to be more productive. mReq is a game-changer when it comes to driving higher levels of adoption in tail spend.