Let’s Talk Tail Spend KPIs

The saying, ”In God we trust, all others must bring data” seems to resonate very well when we start talking about tail spend Key Performance Indicators (KPIs).  However, most procurement leaders that I meet with have little to no KPIs for their tail spend (the 80% of their purchases that makes up 20% of their budget). The reason I referenced the above saying is because if tail spend is not tracked, measured, and reported against, the business is just “trusting” that status quo will continue working. I’d challenge this mentality on two fronts: First, just because you trust your employees…


Tail Spend and the Purchasing vs. Procurement Debate

Both ‘purchasing’ and ‘procurement’ are terms that signify the process of acquiring goods and services that a company needs. This is the reason why many people mistakenly use these terms interchangeably. Even though they sound like synonyms, there are some important differences between them. Understanding these differences can have a bigger impact on your strategies than you might think. To help you gain a deeper understanding of these processes, let’s explain how they actually work. Procurement Rather than a name for a single process, procurement is an umbrella term that encompasses many different processes associated with acquisition of goods and…


Managing Tail Spend in Retail

Moving Toward Better Retail Procurement Running a successful business in this day and age isn’t easy for anyone, but retailers may have it the hardest. Hit with scandal after scandal, including bullying of suppliers, horse meat in beef burgers, and the use of child labor, the retail sector often makes the news for all the wrong reasons. Retailers all over the world have to deal with more than just bad publicity, though. For one, the market is evolving daily and so are the needs and behaviors of the consumers. Additionally, the rise of technology and competition coming from Amazon has…


Tail Spend: Addressing the Headcount – Compliance Tradeoff

Tail spend is spend at an organization that is not strategically managed and typically under $100K per purchase.  However, tail spend is not inconsequential, making up 20% of overall annual procurement spend. Because it comprises hundreds if not thousands of small-spend purchases and is generally not automated, tail spend is a high-touch nightmare as it involves some level of interaction with 80% of all vendors. In these blogs, my goal is to review relevant topics that our team hears from during our 40+ weekly meetings with customers, prospects, partners, advisors, and other procurement leaders.  The coverage will range from “what…


Finding Value in Manufacturing Procurement

Most companies look to their procurement departments to help keep the cost down while maintaining optimal results. This is especially important for small businesses, where even the smallest overspend can spell disaster for the entire organization. If you’re running a manufacturing business, things might not be as simple. After all, the bulk of your process depends on your inventory – machinery, supplies, and raw materials. If you suddenly started randomly cutting costs to save money, it could result in an inferior end product, which would then lead to a loss of profits. Thankfully, this problem is easy to overcome with…


The Challenges of Education Procurement

There has been a lot of talk about education reform in recent years, but all discussions invariably focus on the curriculum. While it’s true that the curriculum is in dire need of a thorough revision, the public-school system also needs to come up with strategies to save money and reduce spending in order to survive. This is where better procurement practices in education play a very important role. Wasteful Spending in Public Education Many claim that we’re better off today than we were ten years ago, but that’s not entirely true when it comes to public education. In 2007, the…


The Importance of Healthcare Procurement

It often seems that no matter where you are the conversation can turn to healthcare reform. While this can be annoying, it isn’t shocking. In general, large systems are fertile ground for uncontrolled spending and healthcare is, unfortunately, no different in this regard. While the exact figures are difficult to obtain due to the sheer size of these systems, research indicates that around a third of the total healthcare spending in the U.S. is wasteful. Annually, this amounts to hundreds of billions of dollars. Now, you can attribute the lion’s share of this waste to unnecessary medical procedures and tests.…


The Procurement Marketing Relationship Is Essential for Business

The Procurement Marketing Relationship Is Essential for Business The 2008 financial crisis, Brexit, and the resulting shifts in the global marketplace have forced businesses to take drastic measures to stay afloat. In an effort to cut costs by optimizing expenses and reporting, companies have placed their biggest-spending departments – usually marketing – under extra scrutiny. At the same time, due to their focus on delivering value at minimum cost, the procurement departments have become an invaluable asset to the success of most companies. It is thus no surprise that many CPOs and CMOs have found themselves working together, coordinating their…


Strategically Managing 80% of Procurement Spending Isn’t Good Enough

Addressing Tail Spend – the ‘last mile’ of procurement spending – can yield big benefits. Businesses worldwide are relentlessly pursuing continuous improvement – reducing costs, increasing efficiency and productivity, delivering better products and services, enhancing the customer experience and retaining employees. Capitalizing on every business improvement opportunity is a corporate imperative. Status quo is not an option. In recent years, digital technologies – Cloud, Big Data, Mobile, Social, Artificial Intelligence, Machine Learning, Apps for Everything, SaaS – have powered massive business transformation. This trend will surely continue as companies seek to gain every available advantage over their market competitors. Today, businesses are investing strategically in…


Generate Value through the CPO-CIO Connection

At first, digital transformation may sound like yet another buzzword making the rounds. However, it is actually a crucial process in the present-day business world. The need to modernize, digitalize, and automate various processes has become the norm for practically any business wishing to remain competitive. Because of it, certain roles within a company have become significantly more prevalent and strategic than they used to be. Among such roles, two stand out: the chief procurement officer and the chief information officer. With IT spending on the rise, it is more important than ever to ensure your company makes the most…