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The Challenge
The Global IT consulting company needed an Aggregator to engage and facilitate the onboarding and invoice payments between themselves and its non-preferred supply chain. These non-preferred suppliers were ones the company engaged with on a one-off basis, or who had an annual spend value under €50,000. The company wanted to reduce the administrative and time burden that would be placed on their Procurement and Finance teams to complete this task. The aim was to find a Broker who could provide one point of contact and complete it on their behalf.
The high amount of one-off orders that an organisation accrues from non-preferred suppliers is referred to as tail spend. These are outside the usual scope of procurement and may be as simple as a meeting room booked in a one-off location or a staff training day activity. It’s not unusual for an organisation to spend 20% with 80% of its suppliers. The other 20% is tail spend.
Solution
CXC provided the company with a consolidated tail spend management solution where CXC could provide one point of contact and swiftly onboard and pay all compliant non-preferred suppliers on behalf of the IT company.
The non-preferred suppliers were incorporated into the categories of Professional Services, Training, Marketing, Human Resources, Marketing Communications, Meetings, Incentives, Conferences and Events (MICE) and Employee Benefits.
The tail spend solution originated in Benelux, Poland and Switzerland and seamlessly expanded into more EMEA regions including Denmark, Finland, Norway, Sweden, France, UK, Italy, Spain, Belgium, Netherlands, Ireland, Luxembourg, Portugal and Romania.
Key Services provided by CXC were:
- Entity to entity invoicing structures.
- Standard and non-standard currencies transaction.
- Management of tax/VAT issues.
- Detailed weekly programme reporting incorporating 15 crucial programme metrics. This provided the company with an EMEA-wide consolidated view of supplier spend by country and categories that they didn’t previously have available.
- A consolidation of non-preferred suppliers into an Aggregator, keeping it to one central place.
Results
CXC engaged with over 900 + suppliers managing a spend value in excess of €7m on behalf of the company.
The key benefits for the company include:
- Reduced administrative burden on the IT company’s procurement teams in engaging, contracting and onboarding the supplier.
- Reduced supplier onboarding times from 4-6 weeks to under 10 days, resulting in quicker payments to the suppliers.
- Reduced supplier risk – streamlining of processes reduced the likelihood of unauthorised or maverick spend, as all tail spend suppliers go through the programme providing procurement with the control they needed.
- Increased efficiency and productivity due to identified spend leakage. This allowed the ability to focus on addressing the issue and to direct spend activity through approved preferred suppliers.
- Lower transaction costs – using CXC as an Aggregator enabled the IT company to reduce its transaction costs by consolidating all non-preferred supplier spend activity through CXC, rather than setting up 000’s of suppliers in their AP systems.
- Online supplier request portal and reporting dashboard. This portal offers the procurement teams with greater visibility of the suppliers being requested for onboard, as well as real-time spend and category reporting.
- Spend visibility — collecting all tail spend data reveals insights into spend patterns, savings opportunities and risks that can inform broader strategies.
- Increased procurement bandwidth — the IT company’s procurement teams can now concentrate on high-impact projects such as strategic sourcing and supplier development by freeing themselves from tedious activities by outsourcing tail spend activities to CXC.
Contact us today to discover how CXC can help your organisation improve and streamline your supplier tail spend like this Global IT consulting company received.
