Tail-Spend Management Webinar

Transcription

1 Tail-Spend Management Webinar Sandy Duncan CIPS Yorkshire Branch Chair Tuesday 20 th August, LinkedIn Group: CIPS Yorkshire Branch Leading global excellence in procurement and supply

2 Welcome to the Yorkshire branch s first webinar Tail-Spend Management - How to squeeze savings from the most fragmented 20% of spend in partnership with PROACTIS Agenda Tail-Spend Overview What is Tail-Spend? The opportunity Tackling Tail-Spend What actually matters? Q&A Summary Webinar Etiquette Your phones are muted so to ask a question type it into the question panel Any questions we can t answer today we will reply to off-line later The recording of this webinar and a copy of the presentation will be posted on the CIPS web site, within the branch events section Leading global excellence in procurement and supply

3 Why this topic? Price Reduction (up to 15%) Increase Controllable Spend (up to 85%) Efficiency Increase (up to 20%) Significant Value Opportunity Increase Compliance (up to 95%) Increase & Maintain Customer Satisfaction Leading global excellence in procurement and supply

4 Tail-Spend Management: Extract Savings from the Most Fragmented 20% of Spend Simon Dadswell Marketing Director

5 Overview What is Tail-Spend? Issues High transaction costs? Fire fighting? Cavalier attitude to risk? Wasted opportunity? A large number of categories Spend spread across business locations Suppliers not known Non-compliance Low value, high transaction volumes

6 Overview 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!

7 Overview 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

8 Overview 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

9 Overview Risk Analysing Tail-Spend: Categories: Stationery Copiers Fleet Couriers Mail Contract Labour Professional Services Marketing Services Equipment costs Type II: Low Value/ High Risk or Sole Sources Type IV: Low Value/ Low Risk and/ or Convenience Sources Type I: High Value/ High Risk or Single Sources Type III: High Value/ Low Risk and/ or Multiple Sources Value

10 Overview Risk Analysing Tail-Spend: Categories: Limited supply markets Emotive issues Services Travel Legal, Audit etc. Type II: Low Value/ High Risk or Sole Sources Type I: High Value/ High Risk or Single Sources Type IV: Low Value/ Low Risk and/ or Convenience Sources Type III: High Value/ Low Risk and/ or Multiple Sources Value

11 Overview Broader Classification Short Tail Spend that can be identified Classified with contracts e.g. office supplies

12 Overview Broader Classification Long Tail None standard requirements Requires sourcing effort e.g. marketing services

13 Overview Broader Classification Steady Tail None contractable spend High price volatility

14 Overview Use appropriate techniques: Segment Misclassified items Techniques Reclassify & incorporate into existing contracts Low price, high frequency One time, high value Fragmented spend Maverick spend Low price, low volume Sourcing, Pcards & use of managed services Rapid RFP & eauction methods Consolidate & source centrally Introduce P2P checkpoints to ensure compliance Remaining true tail-spend

15 Overview 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

16 Practical Steps

17 Practical Steps Our approach: Increase your capacity for Spend Under Management Establish purchase controls Automate invoice processing. Plus, incremental refinement & expansion!

18 Practical Steps Increase your capacity for Spend Under Management On-boarding Data Maintenance Catalogues Suppliers Orders Invoices Queries Buyers e.g. PROACTIS Supplier Portal

19 Practical Steps PROACTIS Supplier Portal: Supplier Management Rationalisation Registration Accreditation Appraisal Self Service esourcing RFx RFQ RFI RFP eauction Multi Stage Advertisement Contract Management Repository Classification Collation Review Monitor Tasks/ Events Supplier Directory & Intelligence Commodity Categories/ Classifications

20 Practical Steps Spend Control: Source-to-Contract (Value Creation) Purchase-to-Pay (Value Capture)

21 Practical Steps Supplier qualification & approval: RFx competitive sourcing Contracted arrangements Initial registration Invitation for relationship Approved Status POs Non-contract spend Continual review Before a transaction Before an opportunity to compete for business More than a quick finance check

22 Practical Steps Establish purchase controls Purchase-to-Pay Supplier Catalogues & Punch-Outs On-boarding Data Maintenance Catalogues Suppliers Orders Invoices Queries Buyers

23 Practical Steps Requisitions & Purchase Order Processing Automatic account coding Identify need Multi-source search Controlled route-to-market Routing & approvals Ordered Automatic budget checking Goods & Services Receipt & Invoice Processing Release to payment Receive or reject goods & services Invoice processing

24 Practical Steps Multi-Source Catalogues Contracts Punch Out Data Entry Supplier Network Automatic account coding Order XML Portal Fax Print Identify need Multi-source search Controlled route-to-market Routing & approvals Ordered Route-to-Market PO Request to buyer RFx Initiative Quick quote Automatic budget checking Release to payment Receive or reject goods & services Invoice processing

25 Practical Steps Automate Invoice processing: On-boarding Data Maintenance Catalogues Suppliers Orders Invoices Queries Buyers

26 Practical Steps Invoice Receipt Invoice Processing Manual entry Receive mail, open, sort, batch, scan Capture invoice data, review & validate Stand alone Invoice Code Invoice Authorisation Release to payment Managed Service PO Box PO Invoice XML PDF PO Flip PCards OCR Output Electronic Invoice Match Resolve Outside Tolerances Release to payment

27 Practical Steps Incremental refinement & expansion: Increase the range of sourcing & supplier management activities Expand the range of suppliers in your purchase catalogue Move suppliers through more efficient electronic commerce

28 Summary

29 Summary In short: Don t overlook Tail-Spend! Address pockets of opportunity Requires technology & process improvement Tactics: Establish purchasing controls Help procurement free up time Use the best methods for each category Automate invoice processing

30 Question Time Leading global excellence in procurement and supply

31 Thank You for your time Leading global excellence in procurement and supply

32 Some Reminders 1. Join Our LinkedIn Group 2. Maintain your MyCIPS Profile Keep in Touch with your branch us 3. Update Your CPD Leading global excellence in procurement and supply

33 About PROACTIS

34 About PROACTIS Who we are: 100% focused on Spend Control & eprocurement Source to Contract Purchase to Pay Cloud-based solutions Source-to-Contract & Purchase-to-Pay Across all sectors

35 About PROACTIS Who we are: Proven success customers countries active licensed users

36 About PROACTIS How we help: Reduce the overall cost of purchased goods & services Improve financial control Mitigate risk It takes a 10% increase in revenues to achieve a 20% increase in EPS It only takes a 1% decrease in operating costs to gain the same result

37 About PROACTIS What we do: Spend Control & eprocurement Source-to-Contract (Value Creation) Sourcing Supplier Management Contract Management Catalogue Management PROACTIS Purchase-to-Pay (Value Capture) Purchasing Invoice Receipt Invoice Matching Employee Expenses Transition Services Advisory Services Category Services Managed Services

38 About PROACTIS Our clients include: Commercial: Public Sector: Not-for-Profit:

39 About PROACTIS Self-assessments Source-to-Contract SRM Sourcing Contract Management Catalogue management Purchase-to-Pay Purchasing Invoice Processing

40 proactis.com Simon Dadswell T: +44 (0)

41 FORTHCOMING EVENTS CIPS Yorkshire branch s first webinar Tail-Spend Management - How to squeeze savings from the most fragmented 20% of spend 1.00pm on Tuesday 20 th August 2013 Supply Chain Risk in the real world 5.30pm for 6.15pm on Tuesday 24th September 2013 at Novotel, Leeds To register for either event go to the CIPS web site / Branch Events Leading global excellence in procurement and supply