How digital solutions can help you capture tail-end spend

Tail-end spend has long been a thorn in the side of procurement teams – but digital procurement solutions are helping professionals gain control.

Amazon Business

For many procurement professionals, tail-end spend is the elephant in the room.

We all know it’s there and it’s probably bigger than we want to admit. But there are always other priorities that will generate bigger savings or improve the end-product that customers buy, meaning it’s a function that has historically been neglected.

Yet spend on items such as office equipment, furniture and technology can add up to large amounts and could deliver significant savings if it can be properly managed. For procurement teams, this provides a valuable opportunity to extend their control into new spend categories and demonstrate the value they bring to the organisation as a whole.

Digital solutions come to the fore

In recent years, the emergence of digital procurement solutions has helped procurement teams take control over such previously unmanaged spend. Amazon Business, for example, allows procurement teams to specify who in an organisation can make purchases and impose spend limits, over which further authorisation will be required. Items can be bought on company credit cards or on account, with a monthly invoice sent to accounts teams, while using Amazon’s trusted delivery network ensures prompt delivery of products for end-users.

This can help avoid situations where multiple employees buy items online or in local shops, with little in the way of authorisation, and then claim money back through expenses. Such a set-up results in unnecessary administration for accounts teams, as well as making it hard to reconcile transactions.

Using a system such as Amazon’s, which employees will be familiar with from their personal lives, also means they are more likely to use official spending routes, as they know they can find what they want when they need it. This can help reduce maverick spend, where employees ignore company processes. It can also help cut costs by providing an easy way for buyers to find the most cost-effective option, as well as freeing up time for staff to focus on their main job.

Procurement teams can also specify which suppliers they want employees to be able to use. This might include local businesses or those which have signed up to certain corporate social responsibility or sustainability pledges. This can help procurement contribute to broader business goals and demonstrate the progress they make towards these over time.

Crucially, using an online store provides much more management information. This means procurement teams can easily see how much is being spent and on what, making it easy to identify opportunities where this could be reduced or even eliminated, and to track spend patterns over time. Procurement teams also benefit from greater efficiency – not having to approve requests for low-value items means more time spent on more strategic initiatives that can deliver higher savings or help deliver on wider company objectives.

ELFT gains control over spend

One organisation that has already benefited from this is The East London NHS Foundation Trust (ELFT). The trust previously used more than 2,000 suppliers, making it hard to keep track of spend or identify any opportunities for cost savings or greater efficiency.

By partnering with Amazon Business, it was able to reduce the number of suppliers to under 1,000 and implement a much more efficient process that removed the need for multiple purchase orders to be generated. This has helped free up time for both procurement teams and other employees, which can then be spent on other activities.

It has provided the procurement team with more information to help make informed decisions around spend and compliance.

“With the Amazon Business dashboard, the data is there instantly,” says Thomas Morgan, Associate Director of Contracts and Procurement at ELFT. “It’s seamless, easy to read and helps us share insights with the CFO and board of directors.”

The trust estimates that tackling tail-end spend has saved around £100,000 a year, which can then be reinvested in frontline services.

Originally published on Procurement Magazine

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How digital solutions can help you capture tail-end spend

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