Spot Buying is for immediate, Ad-Hoc & one-off purchases. It’s estimated that around 40% of company’s indirect spend is from spot buy. As a result, in most of the companies this spend is often under managed as it demands more efforts and the rewards are low.
Most of the time spot buying is done by the end user and not the procurement team. These users are not trained as buyers and due to limited purchasing skills they end up buying products/services at higher cost without understanding the supplier market dynamics.
Most of the firms do not have time or resources to focus on spot buys. They should leverage capabilities of procurement outsourcing services provider, a specialist service provider who can handle it in a timely manner. The specialist service provider can do the job at fraction of the cost as they have the right kind of skills, approach and know how to handle such spend.
Process followed by Specialist service provider to handle Spot buys:
- Specialist service provider is familiar with market place for most of the categories and geography. They have an easy access to various sources (Eg: Internal database, Trade associations, online market place etc.) which helps them to identify set of potential suppliers in a short span of time, generally in 4-5 hours.
- Thus after identification of suppliers the specialists request quotes for the product/service to be purchased from the potential suppliers.
- The quote is received within a day, the specialist puts the analysis together and discusses with the buyer.
- Often the selected supplier is contacted for clarifications on delivery, quality, pricing etc. to meet the buyer’s need.
The whole process listed above is completed within 3-4 days from the day the request is received. Generally the savings achieved for most of the spot buy categories is around 8-10%.
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We at EmpoweringCPO with vast pool of experience, we have plenty of case studies to elaborate on how we were able to manage tail spend successfully for our clients. Our focus on procurement intelligence and procurement analytics have been our two key ingredients to achieve successful results.