Intelligently Integrating the Best of B2C with B2B Buying To Better Manage Your Tail Spend

Last year, our analysts at Spend Matters US teamed up with Amazon Business, the competitive B2B marketplace for business products and services, to produce a detailed study on companies’ indirect spend management. The purpose was to understand the broader end-to-end process of all indirect spend beyond what it is that actually makes up the tail. Given that the ‘tail’ normally only accounts for about 10% of total spend, yet can touch up to 90% of a firm’s suppliers, the study was conducted to help answer organisations’ queries about how better to manage what can often be a very complex and time-consuming process for little reward.

The research covered a good mix of sectors and took in responses from a broad range of professional positions, including supervisors, practitioners, managers, directors, VPs, and C-level. What their responses confirmed is that the ‘tail’ spend, which includes lower-value and non-recurring purchases, is long and fragmented, with many firms using diverse methods (like e-procurement, p-cards, outsourcing, e-marketplaces, etc.) to manage it. So the question is, how do you manage it to save procurement time and resource?

The report takes a deep look at what the most common approaches are currently, how they tie in with the broader sourcing and buying strategy, and explains how to optimise them for better business value. While collecting responses to better understand the challenges of tail spend management, the analysis soon confirmed that realising the potential for applying consumerised B2C capabilities to enterprise-level B2B requirements, could be the answer to fixing the tail problems. So it goes on to map piecemeal strategies against the economic benefits they could deliver if they were used in a collective, collaborative way (see Figure 3 in the report). It then goes on to explain how, by adopting a ‘guided buying’ approach, you can intelligently integrate the B2C experience with that of B2B.

So if, like many others, you are struggling to get to grips with maverick, off-contract, or one-time spend that your preferred suppliers can’t meet, or p-card-type expenditure and lack of POs, and you want to know how to understand it and manage it in a more ‘valuable’ way, then we recommend you read this report. It offers concrete and actionable recommendations for the procurement professional.

The report can be downloaded here.

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