Managing The Tail: How to Optimise Tail Spend through Vendor Consolidation

This whitepaper by Exertis addresses the challenges that supply chain & procurement professionals face in attempting to efficiently manage long tail supply chains. It also outlines the techniques available for optimising tail spend management.

THE PROBLEM WITH MANAGING TOO MANY SUPPLIERS

Today’s customers are demanding - this applies to both external consumers and internal stakeholders within an organisation. Customers demand more speed in the supply chain, visibility into operations, more product choice, customised orders and omni-channel flexibility. Such demands require more variety of materials from a wider base of suppliers, each of whom needs to be trustworthy and reliable. This requirement forces supply chain and procurement professionals to bring on board more vendors, manage more individual transactions, quality assure the materials supplied and make sure stock is delivered to the right destinations at the right times.

THE TECHNIQUES FOR EFFECTIVE TAIL MANAGEMENT

  • Vendor Consolidation

  • Price Matching

  • Distributor Bypass

  • Lead Time Maintenance

  • Culprit Management

WHY OUTSOURCE TAIL SPEND MANAGEMENT?

One option for companies looking to optimise supply chain cost, capital and complexity is to outsource the management of their non-core vendors. An ‘alpha supplier’, such as Exertis Supply Chain Services (SCS), can assume full responsibility for the procurement, management and supply of inventory from non-core vendors directly to a manufacturer on-demand. Since taking over tail spend management for a global med tech firm, Exertis SCS has delivered procurement cost savings in excess of 20% for that client. The following case study summarises the benefits that Exertis SCS is delivering for a global industrial manufacturer after taking over the management of its non-core Approved Vendor List (AVL).

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