Simfoni Spend AutomationTM Solution Overview
Procurement Solutions - for organizations of all sizes.
The Spend Automation Platform offers modular components. You can access the full solution to deliver electronic Requisitioning, Sourcing, Contract Management, Purchase Orders and Payments, or select the functionality you require to meet your needs such as tail-spend management through the BuyDesk and Marketplace catalog management.
Spend Automation™ offers
Stop Chasing the Tail. Capture It.
Procurement teams at Large Enterprise organizations are stretched with having to manage multiple spend categories, fluctuations in global supply and demand, mitigating supply risk in all its guises and on top of that, deliver savings and process efficiencies.
Tail spend typically comprises indirect and lower value direct spend that accounts for 20% of spend but over 90% of suppliers and transactions. Controlling the tail has been a perennial challenge for Procurement as it takes-up valuable time and resource and is hard to analyze and control without specialist tools.
Procurement doesn’t want to be a bottle-neck for lower value spend, so advanced Procurement teams are turning to Simfoni’s specialist solution for tail spend.
TAIL SPEND MATTERS
Unmanaged tail spend represents risk and untapped value.
Procurement functions are right to focus efforts on managing top suppliers and contracts for this is probably where the greatest value and risk lies. However, organizations are always left with a big rump of unmanaged tail spend which often flies under the radar, but when you add it all together the tail can be the size of a top 4 category, or a top supplier.
SPECIALIST TOOLS TO TACKLE THE TAIL
Savings from a dedicated tail spend solution are significant.
Simfoni’s Spend Automation platform is a purpose-built solution to control and optimize tail-spend. The Platform can operate alongside other eProcurement solutions and ERPs and is super easy to implement and connect with APIs. Simfoni’s Spend Automation platform is an ideal solution to control and optimize tail-spend. It can run alongside, and work with, other spend management solutions and ERPs.
Forward-thinking Procurement teams have adopted the Spend Automation platform which frees-up their resource to focus on strategic spend, safe in the knowledge that the tail is being controlled and optimized.
The average return on a Simfoni tail-spend service is significant, yielding savings of 16% - 25% from demand aggregation, specification challenge and automation together with our Marketplace and online catalogs.
Savings are much higher than any other solution due to the platform configuration differentiated delivery approach with a blend of Safe-Harbor sourcing and autonomous sourcing which rapidly competes spend with multiple vendors.
UNMANAGED SPEND CONTROL
Autonomous sourcing and employee self-sourcing controls previously unmanaged spend.
The platform automates over 75% of the quotation management process, meaning that more spend can be competed, wringing out significant savings from previously unmanaged low value spend.
Users have direct access to our Marketplace with catalogs and preferred suppliers with options to deploy Safe Harbor Sourcing where personnel can run their own sourcing events within a controlled environment.
Support for minority and diverse suppliers
The ability to source from minority and diverse suppliers is important to us. Our regional BuyDesks operate across the US, Europe, Australia and the Middle East which means that we can source from local markets, which is especially important when sourcing lower value tail spend requirements which can be purchased from such suppliers which is tracked and reported in analytics dashboards.
Procurement doesn’t want to become a bottleneck for
when there are bigger issues to attend to.
Expense items are at the bottom end of the tail-spend spectrum. Taxis, fuel, sundry items mostly related to travel and urgent ‘field’ expenses like a replacement power cable and component parts.
Spend constitutes less than 1% of an organization’s expenditure. The emphasis for spend control is on having the ability to validate the expenditure. The best way to address such expenses is using P-cards for big spenders and mobile expense apps for everyone else.
Simfoni offers a Mobile Pocket Expenses App where users capture the expense item together with a picture of the receipt. The expense item can be approved and reconciled for employee reimbursement. We also offer a Pcard solution with virtual Pcard transactions which can be used by our BuyDesk for one-time vendor purchases as well as site personnel and corporate staff.
Spend Automation™ includes an integrated Marketplace which offers a consumer-style experience for standard, repeatable spend.
Users benefit from Simfoni’s leveraged purchasing power with access to a range of preferred suppliers and frequently purchased items items including office supplies, MRO, print, couriers, IT hardware and consumables and MRO used by manufacturing businesses which includes fasteners, gaskets, lubricates, safety wear. Customers can also add their custom catalogs and framework agreements for their existing preferred suppliers.
This segment extends to higher value items such as IT equipment and material handling equipment and temporary labor. This spend segment represents around 5-15% of spend, but up to 90% of all transactions so the speed and effort of transaction is important. This is the area where companies are trying to avoid the ‘tragedy of the $25 pencil’; an item priced at $1 but that incurs $24 of staff time to approve and pay for the purchase.
Tactical buying represents items that mostly are known to the user, where the item has been purchased before and the vendor base is known. They differ from custom catalog spend in that the frequency of purchase is lower and hence does not warrant the investment in a framework agreement. Examples include the purchase of mechanical handling equipment, forklift batteries, scanning equipment.
Tactical buys typically represent around 15-25% of an organization’s spend. Orders tend to be in the $5,000 - $250,000 range. The goods or services typically have a specification, but the specification and volume requirement changes periodically.
The key is to identify the preferred vendors for this spend, whilst maintaining competitive tension in the pricing by using an RFQ with the emphasis on rapid turnaround and competitive pricing.
In aggregate, Spot Buys are lower in value than Tactical Buys on Operational Expenditure but if you include Capex purchases, they can amount to very big numbers; potentially more than the entire value of the rest of the tail where large Capex projects are being undertaken.
Spot Buys are one-off purchases and as such the user has limited product and supply base knowledge. Purchase values can vary from $5,000 to over $100,000. Savings from avoiding over-specification of items and competing spend can be as much as 40-50%.
Simfoni has pioneered the concept of Precision Buying™. Using Artificial Intelligence and Machine Learning we have amassed a repository of attributes or characteristics of products based on the millions of products and services that we have sourced across our customers. Based on the description, the platform suggest vendors from a database of over 250,000 Tail Spend vendors.
Now businesses of any size can access the level of enjoyed by larger enterprise organizations.
Spend Automation™ is a unified spend management platform with ‘Pay As You Save’ pricing - everything you need to stand-up a best in class procurement operation with zero upfront capital investment. The service scales up and down aligned with demand providing flexibility that is perfect for today’s volatile business environment.
Same Complexity, Fewer Resources
Medium enterprise companies are at a significant disadvantage when compared to larger corporations who have the deep pockets to be able to invest in procurement technology and large teams of procurement professionals.
Businesses routinely miss out on at least 5-10 percentage EBITDA points achieved through sourcing savings and procurement effectiveness that their larger corporate peers routinely extract.
Medium-size companies still have the same product complexity but the spend might be only a tenth of that of a larger corporation. It is simply not practical for medium enterprise companies to indulge in buying expensive specialist software, and system integration services required to go-live, plus the procurement talent that is needed to ‘drive the software’.
Introducing Spend AutomationTM
Our Spend Automation™ platform uniquely combines Procurement Technology + Marketplace + BuyDesk Sourcing Engine within a unified platform. Commercials are hard-wired to customer success. We have removed the upfront license fee and maintenance costs associated with traditional procurement systems with a fee model linked to demand and savings which flexes with demand – perfect for today’s volatile environment.
The platform is configured and implemented without coming onto site. This model allows customers to get going immediately and start saving with the platform operational in days. Implementation includes analysis of customer spend which informs configuration of the Spend Automation™ platform for the customer. We benchmark current prices against our market information and add additional frequently purchased items to our catalogs. The customer’s preferred vendors are added to digital category cards in the platform along with Simfoni regional vendors to receive bids.
At the heart of our solution is the Marketplace. Marketplace contains over 250,000 SKU’s with leveraged pricing on commonly purchased, standard items including PPE, office equipment and supplies, stationery, IT hardware, IT consumables, couriers, travel, cleaning materials, marketing consumables and MRO. Up to 80% of total indirect requirements can be sourced directly from the Marketplace.
Simfoni works with a broad range of Marketplace Partners which includes a host of well-known names across the regions where we operate. The difference with our approach is that spend is competed in our platform so we know current market prices, plus we manage compliance to negotiated deals – unlike the traditional GPO (group purchasing organization) which is essentially a buying club with no technology which does nothing to address the efficiency of procurement and compliance challenges. Customers no longer have to fund a ‘middleman’ GPO, instead they simply purchase through a single platform with a savings guarantee based on benchmarked spend with spend throughput and savings reports accessed direct through our spend analytics console included within the platform.
BuyDesk Sourcing Engine – Your Own Autonomous Sourcing Capability
BuyDesk hub operations are located close to the customer. New requirements are automatically channelled to the BuyDesk through electronic requisitioning platform.
Tactical and spot buy requirements are automatically bid with vendors by the sourcing engine. Bids are auto ranked and presented to the user for selection. Once the user approves the quote then a purchase order is issued to the supplier which can be performed in the platform.
More complex, higher value requirements are supported by BuyDesk category expertise. The smart thing about this model is the customer is only paying for procurement category expertise when a purchase is required which makes it very cost effective, mitigating the need to hire fulltime procurement resource.
Our sourcing specialists are experts in their field. Depending on value and complexity of the product the appropriate resource manages the request to ensure that goods or services are sourced in the most cost-effective way. Our model means that customer has access to procurement experts but only pays a fee based on the transacted spend.