Fairmarkit: Vendor Analysis (Part 1) — Sourcing solution overview, market analysis, company SWOT, competitors

This is the first in a three-part series that covers Fairmarkit’s sourcing offerings.

The Pareto principle, named after the Italian economist and sociologist Vilfredo Pareto, states that if focused properly, 20 percent of one’s actions leads to 80 percent of the results. Procurement teams commonly follow this principle to prioritize activities and define focus areas to maximize return on investment. Such an area is tail spend, the purchases that makeup approximately 80 percent of transactions/parts/suppliers but only 20 percent of total spend volume. And, following the Pareto principle, many organizations ignore their tail spend because of the apparently meager return on investment. This is a mistake that can have massive consequences and exactly the issue Fairmarkit addresses.

Part of the ‘tail spend challenge’ relates how much effort it can take to understand it, acquire sufficient visibility and ‘data quality’ and address it with SxM and sourcing solutions. The other part is the belief that any return organizations may get by working on their tail spend will be minimal because the quantity of purchased products and services is too low to significantly impact their P&L. However, this can be a dangerous assumption because:

The actual impact that an apparently insignificant component/part/service can have on business performance and continuity does not strictly correlate with how often it is purchased or its unit price, e.g., it can impact business/supply continuity or compliance.

There might be significant savings (and not just in terms of purchased price) in tail spend as it has been left untouched, whereas the ‘head of the spend’ has been managed/optimized for years making residual opportunities very minimal.

Also, if tail spend was not ignored, it has been mainly addressed with catalogs and/or P-cards to reduce transactional and process costs of indirect/MRO spend, BPO to delegate to a third party and GPO to delegate while benefiting from a volume effect. There are other ways of addressing this, though, and this is exactly Fairmarkit’s value proposition.

Part 1 of this Vendor Analysis provides an overview of Fairmarkit’s sourcing solution, an overall SWOT analysis and a list of key competitors. Part 2 examines the solution’s strengths and weaknesses and offers considerations for a potential user to take into account. Part 3 provides a detailed overview of each module and concludes with an analyst summary.

This series is a refresh based on and reuses content from a two-part series from 2019 written by Nick Heinzmann and an update in 2021 by Bertrand Maltaverne.

Here’s why Fairmarkit matters:

To the market: Fairmarkit focuses on tail spend management. So, it boasts specific capabilities more general sourcing solutions lack because they address a broader range of spend segments. Based on its success in addressing tail spend, it is looking to extend its approach to more recurrent purchases.

To customers: Fairmarkit’s solution is designed to be easy to use and quick to adopt so that tail spend is under management and control.

To potential buyers: The growth of Fairmarkit’s solution is a testament to how tailoring a tool to spend management is key to turning that segment into a more positive ROI.