Tail Spend Sourcing – Kevin Frechette from Fairmarkit
Tail spend is a huge, untapped opportunity that you're probably not exploiting to its full potential.
If you're following the 80/20 rule, then managing the tail isn't going to be a key priority when it comes to resource allocation.
Meaning a lot of opportunity goes to waste. Especially if headcount is being cut and procurement teams are having to deal with bigger workloads.
My guest this week is Kevin Frechette, CEO and Co-Founder of Fairmarkit, who were recently recognised by Gartner as one of their "4 Cool Vendors" in the procurement tech space.
I also recently wrote a piece for Fairmarkit's blog all about leveraging tail spend in a recession, if anyone is interested to read my thoughts there!
Strategies for Dealing with your Tail: How AI-powered Automation fits into the Mix
In light of their recognition by Gartner as one of 4 “cool vendors”, I asked Kevin what in his view makes a vendor cool.
Kevin explains how Fairmarkit came into the space of offering tail spend solutions. It’s an interesting story that shows a great example of pivoting what their initial idea was, to actually offering what the market is asking for to solve a specific challenge that kept cropping up in their discussions.
Kevin walks through the business case of why tail spend is a great untapped opportunity, and how a lot of the existing procuretech solutions were not addressing this as an opportunity.
We walk through some of the reasons why there is so much cash left on the table when it comes to tail spend and why organisations often overlook this as a valuable source of cost savings.
Is there a justification to allocate procurement resource to tail spend? If you can’t add headcount, especially under these economic circumstances, then how do you decide what to tackle and what not to? And for what you’re not tackling, what opportunity does this then offer to technology as a solution?
What actually constitutes tail spend? Is there a single definition? And what about services as well as goods?
What are the advantages of using a tech solution such as Fairmarkit vs. just leveraging other non-technical solutions such as BPO, catalogues, MRO and FM integrators and Group Purchasing Organisations?
We explore finding where the "sweet spot” is between value of purchase order and available resources in procurement teams to be able to leverage a tech solution like Fairmarkit to drive value and reduce sourcing cycle time of tail spend items. Kevin then walks through an example of how the process would then work when running a sourcing request through Fairmarkit.
Dealing with data quality and how Fairmarkit can manage non-perfect descriptions of what requisitioners are trying to source. Kevin explains how machine learning will improve the ability to work with imperfect data as the amount of requisitions Fairmarkit processes continues to increase.
We discuss Fairmarkit’s strategy of moving beyond just tail spend to offer a more end-to-end solution, and what the driving factors behind it were.
Kevin explains the concept of “intelligent sourcing”, and how data and automation can be leveraged to streamline and optimise the sourcing process.
Are clients using the productivity gains achieved through using the tool to redeploy FTEs onto more strategic procurement activity? Or are they just using the benefits to reduce procurement headcount?
A final example given by Kevin focuses on the concept of sourcing smarter.