How a Purchasing Card Program Transformed Tail Spend and Streamlined Procurement

In a recent engagement, we delivered a solution to a valued client, leveraging our spend analysis expertise to unveil a significant opportunity within their tail spend. Our recommendation: the implementation of a Purchasing Card (P-Card) program.

This client, with an annual indirect spend totalling close to $300 million and a network of approximately 6,000 suppliers, faced a unique challenge. A closer look through our spend analysis revealed that a staggering 95% of their suppliers contributed to less than 5% of their total spend. The average transaction size was $282.

The company was challenged with operational complexities stemming from diverse geographies and distinct business units. This fragmentation hindered their ability to leverage scale for cost savings, and an excess of buying channels only added to the challenge.

Recognizing these pain points, we proposed the implementation of a P-Card Program. Here's why this solution proved to be the key to unlocking value for our client:

• Reduced Administrative Costs:

  • By streamlining the procurement process, the P-Card program significantly reduced administrative costs, freeing up resources for more strategic initiatives.

• Consolidated Spending Summary:

  • With the P-Card program in place, our client gained a consolidated spending summary. This provided a comprehensive view for tracking and reporting, simplifying the management of their diverse indirect spend.

• Encouraged Purchasing Compliance:

  • The P-Card program was configured to enforce spending policies and controls, ensuring adherence to company guidelines and promoting purchasing compliance.

•  Flexibility and Agility:

  • Employees were empowered with the flexibility to make purchases swiftly, bypassing the hurdles of a lengthy procurement process. This agility was particularly crucial in a dynamic business environment.

The success of this recommendation underscores the versatility of P-Card programs in optimizing tail spend while addressing broader operational challenges. By embracing this solution, our client achieved not only cost savings but also enhanced efficiency and control over their procurement landscape.