Post on 25-Jun-2020
Simon Dadswell, Marketing Director
Joe Taylor, Commercial Director
Simon Thomson, Application Specialist
This Session:
About PROACTIS
Tail Spend Overview
Tacking Tail Spend
Summary
About PROACTIS
100% focused on spend control & eProcurement:
Procurement, Purchasing & Payables
350 customers, 70+ countries
2,000,000 active licensed users
Across all sectors
How we help:
Reduce the overall cost of purchased goods & services
Improve financial control
Mitigate risk
• 10% increase in revenues
= 20% increase in EPS…
• 1% decrease in operating costs
= 20% increase in EPS
Spend Control & eProcurement
PROACTIS
Transition
Services
Advisory
Services
Category
Services Managed
Services
Purchase-to-Pay (Value Capture)
Source-to-Contract (Value Creation)
Sourcing
Supplier Management
Contract Management
Catalogue Management
Purchasing
Invoice Receipt
Invoice Matching
Employee Expenses
What we do:
Tail-Spend Overview
What is Tail-Spend?
A large number of categories
Spend spread across business locations
Suppliers not known
Non-compliance
Low value, high transaction volumes
Issues High transaction costs?
Fire fighting?
Cavalier attitude to risk?
Wasted opportunity?
Why is it often ignored?
Poor data visibility
Lack of effective controls
Little market coverage
Seemingly low potential savings
Lack of interest from other stakeholders
Lack of category expertise
…..It’s not just the ‘trivial’ purchases!
The main causes:
Lack of compliance and, therefore, spend visibility
Emergency purchases
Spend not covered by current contracts
The real cost:
Paying higher prices
Large invoice-handling workload
Exposure to risk
Things to consider:
Spend visibility
Filtering & reclassification
Sourcing
Online eRFx & eAuction tools
Spot buys
Repeat spot buys onto contract
Accelerated sourcing techniques
Purchase-to-Pay
P-cards, online catalogues, punch-outs
Accounts Payable
Analysing Tail-Spend:
Type II:
Low Value/ High
Risk or Sole
Sources
Type I:
High Value/ High
Risk or Single
Sources
Type III:
High Value/ Low
Risk and/ or
Multiple Sources
Type IV:
Low Value/ Low
Risk and/ or
Convenience
Sources
Ris
k
Value
Categories:
• Stationary
• Copiers
• Fleet
• Couriers
• Contract Labour
• Professional Services
• Marketing Services
• Equipment costs
Analysing Tail-Spend:
Type II:
Low Value/ High
Risk or Sole
Sources
Type I:
High Value/ High
Risk or Single
Sources
Type III:
High Value/ Low
Risk and/ or
Multiple Sources
Type IV:
Low Value/ Low
Risk and/ or
Convenience
Sources
Ris
k
Value
Categories:
• Limited supply markets
• Emotive issues
• Services
• Travel
• Legal Audit etc.
Broader Classification
Short Tail Spend that can be identified
Classified with contracts
e.g. office supplies
Broader Classification
Long Tail None standard requirements
Requires sourcing efforts
e.g. marketing services
Broader Classification
Steady Tail None contractable spend
High price volatility
Use appropriate techniques:
Reclassify & incorporate into existing contracts
Sourcing, Pcards & use of managed services
Rapid RFP & eAuction methods
Consolidate & source centrally
Introduce P2P checkpoints to ensure compliance
Remaining true tail-spend
If you do, you will see:
Noticeable cost savings
Better visibility of where you spend money
A reduction in maverick buying
A sizeable cut of invoices
A reduction in time needed to manage suppliers
Also…
Better supplier relationships
Better payment terms
This Session:
Introduction
Areas to tackle
Procurement Capacity
Supplier Participation
Transactional Purchasing
Summary
Introduction
Strategic Spend Excessive effort?
Deeper evaluations?
Greater transparency?
More reviews?
Tail-Spend High transaction costs?
Fire fighting?
Cavalier attitude to risk?
Wasted opportunity?
Exec Team Requirements On-time procurement?
Impact on margins?
Impact on client satisfaction?
Working capital impacts?
Continuity, sustainability and risk?
Personality centric procurement?
What proportion of:
Procurements are on-time?
Suppliers/Contracts are actively managed?
Decisions are truly transparent?
What proportion of Suppliers:
Are vetted/owned by Procurement?
Initially?
On-going?
Are competitively evaluated?
Are regularly appraised and reviewed?
Manage their own data?
What proportion of:
Invoices have PO?
Invoices end up back in the business?
Commodity purchases use Supplier catalogs/contract
prices
Invoices are electronic?
Spend is transparent?
Discover
& Qualify
Source
& Tender
Select
& Manage Contract Purchase Receipt &
Process
Buyers
Procurement
Capacity
Transactional
Purchasing
Supplier Participation
Areas to tackle:
1. Procurement Capacity - Improve efficiency and accountability
2. Supplier Participation - Lower lead times, remove errors and admin
3. Transactional Purchasing - Ensure Controls and Compliance
Increase Procurement Capacity
Questions: Does Procurement manage enough spend?
Proportion of spend is competitively evaluated?
Proportion of suppliers are ‘fully’ managed?
Proportion of contracts are ‘fully’ managed?
Is there enough competition?
Are recommended suppliers used?
Is the process systemised and repeatable? i.e. Spreadsheets?
Can you see status and performance of all suppliers?
Would you describe the process as ‘low admin’? Supplier data managed?
Swamped by inbound sales calls?
Many procurement teams are lost in admin
What to aim for in Source to Contract (S2C):
Sourcing
Increase coverage & number
of evaluations
Improve transparency & repeatability
Manage Suppliers and Contracts:
Obtain visibility of performance
Manage risk
Increase ‘on contract’ spend
How?
Automate the ‘grunt’
in Sourcing
Automate visibility
and monitoring
PROACTIS Demo:
For information on PROACTIS solutions email
info@proactis.com
Discover
& Qualify Source
& Tender
Select
& Manage Contract Purchase Receipt
& Process
Buyers
High Avge
On-going Performance
88%
73%
48%
High Avge
Supplier Failure
2% 3%
5%
High Avge
Spend Under Mngt.
78%
50%
39%
Supplier Participation
Questions:
Is all supplier information in one place?
Essential company details?
Insurances, documents, etc.?
Catalogues?
Status of all Suppliers?
Reviews?
Who looks after it?
Do you interact with Suppliers online?
Would you describe the process as ‘low admin’?
Purchasing
Purchase-to-Pay (Value Capture)
Sourcing
Supplier Management
Contract Management
Catalogue Management
Invoice Receipt
Invoice Matching
Employee Expenses
Source-to-Contract (Value Creation)
Market
“Average”
Purchasing
Purchase-to-Pay (Value Capture)
Sourcing
Supplier Management
Contract Management
Catalogue Management
Invoice Receipt
Invoice Matching
Employee Expenses
Source-to-Contract (Value Creation)
18%
20%
27%
5%
56%
25%
Market
“Average”
On-boarding
Data Maintenance
Catalogues
Orders
Invoices
Queries
Automate, streamline & manage processes:
Suppliers Buyers
PROACTIS Demo:
For information on PROACTIS solutions email
info@proactis.com
NfP Organisation
Discover
& Qualify Source
& Tender
Select
& Manage Contract Purchase Receipt
& Process
Buyers
High Avge
Suppliers Enabled
60%
28%
10%
High Avge
Supplier Duplicated
1%
12%
27%
High Avge
Catalogue Change
<1 day
10.1 days
11.6 days
Transactional Purchasing
(Purchasing & Invoicing)
Questions: Do you have full Purchasing Policy and Compliance?
Strong and clearly articulated policy?
Process adopted in the culture of organisation?
Is the process Systemised?
100% Compliance?
Can you see all historical and WIP spend?
Would you describe the process as ‘low admin’? Accounting and complexity taken care of?
Little process ‘noise’?
Easier to avoid the policy?
Without transparency and control it is impossible to identify the tail
Avoid unauthorised spend
Lower costs
Automate the accounting
Provide the transparency needed to:
Exploit purchase power
Manage budgets
Make decisions
Improve the ROI and the processes
How?
Make it simple
Buying
Approvals
Invoice troubleshooting
Guide staff to the right
suppliers/agreements
P2P
PROACTIS Demo:
For information on PROACTIS solutions email
info@proactis.com
0
2
4
6
8
10
12
14
16
Purchasing
Financial Authoriser
Requisitioner
Minutes
High Avge
Req-to-Order Cycle
<1day 3 days
8 Days
High Avge
Req-to-Order Costs
<$10
$27
$30
Discover
& Qualify Source
& Tender
Select
& Manage Contract Purchase Receipt
& Process
High Low
Compliant Spend
86%
51%
36%
Drive PO compliance
Focus on Straight Though Processing (STP)
Consider technology as an enabler
Make suppliers ‘self-serve’ enquiries
How?
Remove paper
Electronic techniques
Bureau for paper
Improve order quality
Select the best method per supplier:
High volume strategic suppliers
Smaller suppliers
Level of IT sophistication etc.
Media
Group
0
1
2
3
4
5
6
7
8
9
Purchasing
Accounts Payable(Invoice match has discrepancies)
Minutes
(assumes 3 way matching)
Discover
& Qualify Source
& Tender
Select
& Manage
Contract Purchase Receipt
& Process
High Avge
Invoices per FTE
90K
42K
10K
High Avge
Electronic Invoices
85%
66%
25%
High Avge
Invoice Exceptions
2%
12%
17%
Summary
Tackle Tail Spend:
Noticeable cost savings
Better visibility of where you spend money
A reduction in maverick buying
A sizeable cut of invoices
A reduction in time needed to manage suppliers
Also…
Better supplier relationships
Better payment terms
Next Steps
proactis.com
Self-assessments
Source-to-Contract
SRM
Sourcing
Contract Management
Catalogue Management
Purchase-to-Pay
Purchasing
Invoice Processing
What Spend Control Action is a ‘No-Brainer’ for You?
1. Purchase Authorisation
2. Invoice Processing
3. Electronic Invoices
4. Employee Expenses
1. Supplier Management
2. Sourcing
3. Contract Management
4. Supplier Content