Complex Spend Challenges
Category Manager Average Managed ($m)
Time spent on non strategic work
No touch purchases
Spend savings opportunity
The complex spend problem
Every year, companies make millions of purchases that are too small to be handled by procurement or too infrequent to be included in a single vendor catalog. The impact on procurement of this spend is significant:
- The average procurement full-time equivalent (FTE) manages more than 300 suppliers (with over 85% in the tail) and more than 2,500 purchase orders per year
- The average procurement professional spends 58% of their time on non-strategic work (Spend Matters)
Plus, there is a significant impact on the organisation as a whole in terms of efficiency and costs associated with placing purchase orders: with items purchased at inflated prices, mismatched orders and invoices, lost purchase orders, delays on sign off of purchase orders and poor choice of suppliers, as just some examples of where costs can be incurred.
Suppliers are often keen to bypass official procurement processes and employees often find them a burden to be avoided. In 80 per cent of businesses, these categories are often sourced manually using Internet searches, phone, fax, and email, allowing them to bypass the mandated rules or purchasing guidelines.
Some categories of expenditure are just harder than others. The complexity could be a result of the high purchase frequency, the low average order value, the importance of specification accuracy, manual sourcing processes from a large number of small (often local) suppliers, the short response and delivery times or the fact that demand may be spread across an organization.
Whether you outsource these complex spend purchases or want a way of automating these, Claritum can help: our cloud solution is supported by a number of outsourcing companies (Procurement Service Providers) who operate regionally and globally, plus our solution is available directly from the cloud to organisations of any size.