World-class procurement organizations have streamlined their internal processes, capitalized on existing savings opportunities, developed advanced strategic sourcing programs, and consolidated at least 80% of spend down to 20% (or less) of their suppliers. Despite these successes, pressure to unearth new sources of savings remains. To do so, procurement must expand the scope of its influence and take a hard look at the 20% of spend spread thinly across the remaining 80% of suppliers – a.k.a. the tail spend. Tackling tail spend requires a multifaceted approach that includes the use of e-catalogs, tactical sourcing desks, spot buying technology and outsourcing providers. At some world-class organizations, teams are now creating a framework to expand the supply base in a controlled way, to increase stakeholder satisfaction and foster innovation. Enabled by a new wave of B2B spot buy technology, these groups are providing access to a wide range of suppliers on the open market while still maintaining visibility and some level of control over spot purchases.

Contributors: The Hackett Group
Categories: Whitepaper
SRC Type: Category Specific, Information Technology (IT), Sourcing, Trends