protection and gloves. End users often decide to purchase items on
their own, in some cases buying directly through local hardware or
department stores and submitting receipts for reimbursement. This,
of course, cuts into total cost savings and creates disarray with item
consistency and compliance guidelines.
Fortunately, there are strategies that can help supply management
reduce the inherent complexity of MRO spend, as well as generate
savings without sacrificing quality.
UNCOVERING UNPLANNED SPEND
One of the most effective ways to reduce rogue and tail spend
(a small percentage of overall spend not actively managed by
the procurement team) is to identify and address the underlying
reasons it occurs. This requires supply management practitioners
to examine the category holistically to gain an understanding of
all purchases over a time frame, says Michael Croasdale, senior
consultant in the MRO practice at Source One Management
Services, LLC in Willow Grove, Pennsylvania. “It’s a common
misconception that you can’t save money or contract for
unplanned purchases in the MRO space. However, with a holistic
approach, you can identify patterns and trends,” says Croasdale.
“While certain purchases can be planned during emergencies,
historical data provides an overview of spend amount year over year
with a particular supplier or in a specific subcategory.” Using this
information can shape negotiation strategies and lead to preferred
supplier agreements that incorporate discounts and cost structures
to meet the needs of your organization, he says. Doing so “helps
you take measures to proactively plan for purchases that occur
unexpectedly,” he says.
Another way to achieve compliance is to ensure end users
throughout your organization are happy with the prices, quality
and service levels from suppliers. It’s possible that rogue spend
occurs because end users are dissatisfied with the suppliers you’re
contracted with. Thus, it could be helpful to perform user surveys
to gauge what’s happening at the ground level and if suppliers are
meeting needs and expectations.
Ongoing communication between the supply management group
and end users is crucial, as is compliance tracking, says Robert
“It’s a common misconception that you can’t save
purchases in the MRO space. However, with a holistic
patterns and trends.” — Michael Croasdale, Source One Management Services, LLC