Tail Spend Management
November 11, 2023
The Challenge

A leading manufacturer in Australia and New Zealand, was undertaking a strategic review of the spend and had identified a long tail 300+ suppliers, $100M+ of spend that had never been reviewed. The spend was highly fragmented, managed at a site level and data visibility was very poor and contractual commitments with suppliers unclear. The client was looking to build visibility and drive costs savings through sourcing and consolidating the supplier base.

The Solution

Seeing the quality of the information available, we deployed a hybrid approach to execution.  

  • A quick high-level diagnostic was completed, where we cleaned the data, mapped spend categories and suppliers to build some level of visibility across the board.
  • To generate further insights, we socialised the data with stakeholders across 30+ sites across ANZ.
  • This enabled developing our focus areas, target spend and approach to driving value and building visibility.
  • Depending on the level of data and type of spend, we used a hybrid approach consisting of our Strat Source and Rapid-Fire products along with a collaborative solution development exercise working with key suppliers identified as part of the market analysis.
  • Through this hybrid approach we were able to address ~60% of the spend. The balance was already being addressed by the business or parked for future review due to changes to organisational strategy
The Outcome

Through deploying our methodology and approach, we were able to bring visibility to the client’s Tail Spend and related supplier arrangements

  • Through the sourcing activity we put in place rate cards and commercial arrangements to drive visibility and 10-30% in savings across sku families.
  • The collaborative solution development activity with suppliers delivered upwards of 20% in savings across the critical consumables and spares category while building visibility through moving to a hybrid ordering platform unique to the category
  • Consolidation of suppliers was achieved through rationalising the supply and buying clusters e.g. for a services category moving from 20 suppliers to 1 supplier.
  • Identification of new sources of supply for key component categories enabled the development of a distribution arrangement for the organisation to build revenue streams and delivered savings by 10%