Are you Spending too much Time and Money on your Tail Spend ?

Processes that can be eliminated

Did you know that your indirect expenses incurred in sourcing office supplies can be more than the discount you are getting, or in some cases as much the entire spend on office supplies ?

Here's Why

Contact one or more supplies to get quotes, and check availability

Not all suppliers have the same brands, or even the same products. In addition, before placing the orders, you have to check if the products you want are available. If they’re not, you may spend days going back and forth between suppliers to get your orders finalized, wasting valuable time.

Prepare and send Purchase orders

Once you have the products finalized, you need to make sure the purchase orders are sent, received, processed, and ensure they’re delivered to the right place. This includes following up which takes up even more time.

Receive goods and check against Purchase orders

After the goods are received, you have to ensure it’s all there. Often, suppliers don’t provide Stock Keeping Units or other details to check your received goods, to ensure that everything is received.

Store goods in internal warehouse / safe location

The products once received have to be stored properly. This will require more human resources, organization, and more time. Furthermore, if some goods are not labeled properly by the supplier, there will be losses incurred before the goods are even stored.

Issue goods to employees on request

As employees require products, different companies have different processes involved in issuing them. This can consume more time, involve needless paperwork, and use up more resources.

Manage Stock levels

As goods are being issued, there’s a requirement for making sure the stocks are kept replenished properly.

Analyse usage for Audit and Management reports

When goods are issued, an issue of transparency and accountability comes up. Most companies have no way to audit and verify their usage, and figure out how their supplies are being used, or misused.

What is Tail Spend?

The term ‘tail-spend’ (Indirect Spend) comes from the well-known Pareto principle – that 80% of spend will come from 20% of suppliers; and that, conversely, 80% of suppliers will account for 20% of spend; typically across a wide range of categories.

Why is it often ignored?

Procurement professionals spend the majority of their time managing the big core areas of spend where the numbers are larger and savings are more quickly won.

Even organizations that have gained a good level of control over most of their cost structure meet a number of challenges when they look at the tail-end of spend:

• Poor data visibility • Lack of effective controls • Little market coverage • Seemingly low potential savings • Lack of interest from other stakeholders • Lack of category expertise in the very high number of categories remaining

While your company may have optimized every cent spent with direct suppliers, Lean Six Sigma’d the heck out of your manufacturing operations, and tightened your supply and delivery timelines down to the hour, indirect spend presents the next frontier in opportunity for increased efficiency and cost control.

Acting as a single source supplier for all your office supplies, O₂ can help to save your business valuable administration time, improve efficiency, reduce costs and cut consumption. We can increase visibility of your business spend and keep you in control, whilst delivering everything you need under one account, one invoice and one delivery service

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Dont let your Tail Spend send your Business into a TailSpin

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