Low-value spend management is also known as tail end spend management. It is focused on savings and establishing efficient working conditions .Tactical activities take a backseat here and strategic take over.
A door to business success!
Low-value spend management is essential in creating significant savings. These savings happen when only the tested methods are put into practice. There can be no shortcuts or any other methods except the ones that are tried and verified by the management. Taming the Tail-end or the low-value spend is the key to success of the business.
Nowadays, the low-value spend is being controlled. The low-value spend management requires a few steps to make the management a success.
When the taming starts…
Procurement here comes into practice and opens door for the solution of the low-value spend. Online purchases are encouraged under the procurement and compliance is directed towards the agreements that already exist rather than choosing new ones. For all queries, the help desk has the supplier agreements and the sourcing department to which the enquiries are directed.
Visibility is never sacrificed and services related to negotiation and tendering are quick and efficient. Low-value spend management knows where to aim that obstructs the progress of the business. It can be a fragmented spend, a maverick spend, a misclassified or a high volume spend.
The data is shaped into an organized whole with innovative techniques. Some tools are required for the process and once the requirements fit in, the change is bound to happen.
The service and quality of the supplier remains the same even after the change. These are out of some of the things that need to be in its exact form. Low-value spend management retains the qualities of the steps that need no change and at the same time, works on the immediately needed changes without which the success seem impossible.
The reasons that demand changes and the low-value management can be decentralized purchasing or decision making. The growth rate of a particular firm shows clearly when it needs to be changed. These demands are otherwise not met as they are considered very minor. But as we know, even little changes lead to bigger transformation. And so it happens with this low-value spend management.
The tail can be recognized in various ways. It can be the transactional low-value purchases which are higher in volume or the contracted spend of the customer that has a trivial value or does not fall in the category of agreement. The spend might have been accumulated from vendors who cannot be trusted upon or aren’t reliable. Its reason can be lack of trend analysis, imbalance between the spend and the supplier, negotiation used in a way that brings more loss than profit. When the new suppliers are added on a quarterly or half yearly basis, it creates fluctuations and becomes difficult to maintain the same pace of progress for a long time. Low-value spend management comes to the rescue putting even minor transactions to use that generate profits. It is a must to save the business from reaching the drowning mark.