Tapping Into Tail Spend Through Source-To-Pay Solutions


Organizations of all sizes may realize savings and gains by effectively managing the purchase of goods and services outside of their standard purchasing procedures. With tail spend accounting for up to 30% of total spend, analyzing and modifying this spend can have significant impact on companies profitability. By utilizing Source-to-Pay (StP) solutions, companies can realize greater ROI on their tail spend while ensuring compliance with all applicable rules and regulations.

Tail spend, the portion of companies total spend that falls outside of their traditional procurement framework, is an often overlooked and underestimated segment of organizational purchases. Despite making up to 30% of an organizations total spend, it is often handled without much oversight, leaving the potential for tremendous savings and revenue opportunities untapped. Source-to-Pay (StP) solutions are designed to recognize and maximize this tail spend.

What is Source-to-Pay Solutions?

Source-to-Pay (StP) solutions, such as those created by SAP, are comprehensive systems that utilize combination of technologies, from online catalogs to invoice automation, to better manage and control an organizations resources. This includes optimizing the procurement of all types of goods and services, regardless of their size, complexity, or sources. StP solutions ensure that an organization can secure the most favorable deals without sacrificing speed and agility. Through centralizing processes and streamlining communication, the integrated nature of StP solutions transforms and optimizes the purchasing process.

How does it Work?

The utilization of Source-to-Pay (StP) solution begins by analyzing companies existing purchasing patterns and mining resources. This lays the foundation to develop central repository with pre-vetted suppliers and transparent pricing. StP solutions provide template of best practices and pre-approved flowcharts that help to maximize the value of each purchase. This entails contracts, compliance, spend management, and even data analysis. Suppliers are monitored to ensure timely delivery and quality products are received.

Once the procurement plan is in place, StP solutions then create master list of preferred vendors that meet the predefined criteria. Utilizing the sourcing capabilities of an StP solution, companies are able to leverage the initiatives created by their suppliers to secure the most favorable deals for their organization. The system then updates the master list according to cost savings or new vendor preferences.

In addition, StP solutions provide way to optimize any purchases that fall outside of the master list. With integrated e-commerce platforms and online catalogs, organizations can quickly search for and compare the cost of products from multiple suppliers. Alternatively, there may be additional savings discovered by using an auctioning feature built into the system, where the best prices are determined by competing vendors. Once the ideal vendor for the purchase has been chosen, StP solutions enable seamless authorisation system for those directing the purchase.

In conclusion, organizations of all sizes stand to benefit from the implementation of Source-to-Pay (StP) solution. By analyzing and managing its tail spend, businesses can unlock hidden savings and opportunities while still ensuring compliance across organizational levels. StP solutions provide comprehensive system that centralizes purchasing methods, improves the efficiency of the procurement process, and encourages the best value, allowing companies to get the most out of their purchases.