Decentralized Procurement Model
Every company has a different definition of tail spend, but at Fairmarkit we define it generally as spend that is not strategically managed and typically under $100K per purchase. Due to bandwidth constraints, procurement’s effort to de-risk these purchases has historically been to setup one preferred supplier, create 50+ static and dynamic catalogs, or simply implement an “in good faith” policy that end users should do their best to get competitive pricing.
Common Decentralized Model Outcomes
- Preferred suppliers and catalogs lack competition and typically provide pricing 6-12% higher than if competition is invited.
- End users take the path of least resistance and typically make purchases based off one quote with no benchmarking or additional sourcing work to validate this decision.
Decentralized Procurement Model and Fairmarkit
The above scenarios have made sense up until now, because companies tend to measure the Effort Vs. Impact of any employee activity. And it has been shown that searching for bids to gain price savings or verifying which vendors are actually approved for tail spend purchases has not had a strong ROI on the time required. Fairmarkit has taken on this challenge and built a self-service platform that communicates with your policies, vendors, and data to ensure that end users can gain the benefits. For procurement teams, this means more spend under management, time and money saved, and risk reduced.