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Industries face challenges in managing indirect procurement to meet the quicker needs of end users from various business and functional units, such as productions, operations, engineering, administration, IT, and finance, etc., often procurement executives struck by spending more time on low-value buys (tail spends) as a process to meet the KPIs.

What is Tail Spend:
Tail spends are majorly defined as low-value items resulting by the large number of smaller-value transactions, that collectively account for a significant number of suppliers associated with the procurement function.

In manufacturing industries, tail spending includes Office supplies, safety items, MRO (maintenance, repair, and operations) items, and services. Effective management of tail spend can result in the following benefits,

a. Streamlined procurement processes,
b. optimizes the overall procurement efficiency,
c. Controlling the procurement budget,
d. Optimizing the PR – Delivery Turnaround Time (TAT).

The following approaches can help us to manage the tail spending better,

1. Procurement Spend Analysis: Comprehensive analysis of the last 2 – 3 year’s procurement data can provide us the visibility of tail spend items and their associated suppliers. Categorize the spend bucket and prioritize their criticality and impact on production and operations.

2. Standardization: Material data cleansing can help organizations to get rid-of duplication and specification enrichment and standardization can restrict the various price point purchase in different specifications. By reducing product variations, we can negotiate better deals with suppliers and simplify inventory at stores.

3. Centralization: Centralized procurement process will provide visibility and control over the items and spend value. The procurement process standardization and enforcing contracts will improve functional efficiency.

4. Harness Technology: Implement tail spend management tools or e-procurement software that can automate the process and provide real-time monitoring. The platforms help in making data-driven decisions, improve efficiency & reduce manual intervention and errors.

5. Supplier Rationalization: Reduce the number of suppliers for tail spend items by consolidating vendors. Work with a select group of reliable consolidators who can offer reliable deliveries, competitive pricing and streamline the procurement process.

6. Continuous Improvement: Continuously review and refine the tail spend management with the consolidators to strategies. Monitor spending patterns and tweak purchasing approaches to adapt the changing needs.

Instatenders provides various operating models to manage the tail spending effectively and efficiently using the in-house tail spend management tool. InstaTenders currently working with manufacturing Industries of various product lines and facilitating the smooth tail spend process transition and enabling following benefits.

a. Cost savings,
b. Reduction in total cost of ownership, and
c. Free up resources to focus on strategic initiatives that drive growth and innovation to the organization.

Write to us to know more at info@instatenders.in

Call us at +91 – 9150081257

Spot buys, or spot purchasing refers to buys made on an ad-hoc basis to meet the immediate requirements, with a lack of prior planning. Spot buys can be challenging to manage effectively since they require urgent and needs quick decision-making.

We can adopt some of the approaches given below to manage it well:

Analyse past needs: To manage spot buys effectively, we need to have a clear understanding of the past and current requirements. When identifying the pattern of buys and needs, will help you to focus on the process more efficiently.

Set a Budget:  Pre-approved budget to manage the spot buys will help you to limit the expenses within your financial limits and cap the overspending.

Supplier  Selection: Apply the consolidator approach and engage with a reliable source of suppliers who can manage the spot buys by reducing the transactions. Establish the approval process and define the roles and responsibilities consolidator and suppliers and purchasing organization.

Process Control: Technology can help us to manage spot buys with complete control and monitoring without budget overrun. Engage with the procurement service providers to manage it effectively by reducing the non-strategic supplier base and automating the PR to Delivery process. This will ensure consistency and improve the efficiency.

Documentation: The spot buy management platforms can help us to document the spot buy and keep all records of the transaction. This will help with future audits and tracking of expenses.

Performance Monitoring: Monitor the service provider/supplier’s performance and ensure that the goods or services are delivered as expected. Keep the evaluation matrix in place.

with our Procure to Pay tool which is specifically designed to manage the Spot buys, We can manage spot buys effectively and ensure that they are completed on time, within budget, and to your satisfaction.

write to us to know more info@instatenders.in

Call us at +91 – 91500 81257