A few strategic goals guide any procurement transformation initiative. After collaborating with our customers, this is how we’ve seen Fairmarkit’s Tail Spend Management Platform fit into a strategic procurement department.
Strategic Sourcing Goals: Remove risk from procurement, increase productivity, increase spend under management, drive cost savings and ensure compliance.
Minimize Risks Arising From Maverick Spend: Purchasing without a formal procurement process invites unnecessary risk. It increases the chance of engaging an unreliable supplier, and can leave your business open to cyber-security threats. Fairmarkit standardizes the procurement process to minimize risk. It finds and selects trusted vendors to neutralize risk while ensuring aggressive pricing through competition.
Increased Employee Productivity: Procurement departments without a tail spend management plan are not working as efficiently as they could. With Fairmarkit, our customers have radically reduced the number of employee hours spent on non-strategic initiatives. This improved efficiency has allowed our customers to re-allocate worker-hours to strategic initiatives, reduce headcount, and bring informal spend under management. We empower buyers to be exponentially more effective, while end users to enjoy a business-to-consumer (B2C) like experience.
Increase Spend Under Management: Tail spend accounts for 80% of an organization’s yearly transactions, even if it represents only 20% of its total spend. This ratio might lead one to believe that managing tail spend requires more employees, or that it’s best to forego the tail in favor of core accounts. Luckily, there are technological solutions to improve procurement efficiency without increasing headcount. As CPOs continue to list “total spend under management” as a KPI, Fairmarkit is uniquely positioned to assist as the only tail spend management platform.
Drive Measurable Cost Savings: The concept of increased competition leading to more aggressive pricing is not a new one. Historically, however, it has been accompanied by a tradeoff: Time versus Impact. Put another way, it’s a balance between effort and savings. Many companies have preferred to minimize effort, moving to preferred suppliers or catalogs because the time it takes to solicit and collect 5+ bids can seem to outweigh the cost savings.
At Fairmarkit, we’ve identified two truths with data:
- Companies can collect 5+ bids in less time than it used to request one quote when using process automation.
- Open market competition averages a 5-7% cost savings over static catalogs or preferred supplier relationships.
This isn’t our theory, we’ve proven it for our customers.
Ensure Compliance: Our customers set best practices for their buyers and shoppers, but there are several instances where compliance is a mandatory external policy that falls on the shoulders of procurement to enforce. We’ve noticed two key challenges to enforcing these policies when it comes to tail spend:
- If procurement is not in the position to mandate procedures for small to medium sized purchases, how do we get everyone to use a system or follow a process?
- If procurement doesn’t have actionable data for their tail spend, how can they report against it in a time effective manner?
Whether it’s the public sector, higher education or the private sector, Fairmarkit provides procurement teams with oversight and control. We provide businesses full visibility into their spend and give them the knobs and levers necessary to nudge the actions of buyers and suppliers toward desired outputs.