Analysing spend categories for potential savings is an important process to ensure that products and services are sourced at the best possible price.
Complex spend categories are often characterised by frequent, low value orders, often placed by large numbers of inexperienced employees under time deadlines. Suppliers are often keen to bypass official procurement processes and employees often find them a burden to be avoided. In 80% of businesses, these categories are sourced manually (by Internet searches, phone, fax and email) and can often bypass centrally mandated rules or purchasing guidelines. It is these manual processes that prevent most organizations from gaining the visibility and control they need to effectively manage their expenditure.
In many organizations, these categories of expenditure have been more challenging to address than more commoditized purchases. As a result they have been ignored as CPOs (Chief Procurement Officers) focused on the quicker wins or simply outsourced to agencies and service providers – with mixed results.
Globally these categories are worth US$2tn with 80% of complex categories purchased manually. Businesses typically spend 1-3% of their turnover on complex categories and figures indicate that 15% – 40% savings can be achieved by bringing spend under management. Savings of 30% to 40% are not unrealistic according to ‘Procurement Leaders’.
Download our spend analysis white paper
This White Paper focuses on the management of one of the largest of these complex categories (print) and how to achieve savings and efficiencies.