Indirect purchases, particularly tail spend, non-strategic and one-off purchases, pose a real challenge for companies in terms of their competitive edge. However, very few companies have a comprehensive overview of their level of maturity in managing tail spend. Similarly, they have little insight into the maturity of the industry leaders or indeed the industry average.
To meet this need, Manutan has just released the first ever tail spend barometer for the construction industry.
The purpose of this barometer, based on the Savin'side® method, is to provide an industry-specific situational analysis of the management of tail spend within French organisations, as per the company's NAF code.â¯
Savin'side®: A method for optimising tail spend
The Savin'side® method enables companies to optimise their tail spend and make substantial savings.
It takes six areas into account when examining a company's tail spend purchasing habits, in order to pinpoint sources of hidden costs and identify the most suitable optimisation levers. These areas are:
- Supplier rationalisation
- Product optimisation
- Digitalisation of transactions
- Supply chain optimisation
- Deployment of the agreement
- Quality management
Tail spend in the construction industry
Manutan has released the first tail spend barometer for the construction industry, based on the Savin'side® method.
The construction industry is a good way to gauge the health of the French economy and today accounts for almost 8.6 billion euro of investments into tail spend.
The study reveals that construction companies are actually reasonably mature, with a Savin'side® rating of 3.1/5. On average, these companies spend 58 euro on tail spend per employee per year, using a supplier contract negotiated by the procurement department.
In this industry, the average amount spent per year on tail spend is 100 euro per employee. This represents a loss of 42 euro, primarily due to unscheduled purchases made outside of the company's procurement policy.
In addition, there are significant disparities depending on the size of the company.
Some 43% of companies, mostly small organisations, outperform their larger counterparts with an average Savin'side® rating of 3.7/5. On average, they spend 65 euro on tail spend per employee per year, and these are made within the framework of a negotiated contract.
In contrast, the average Savin'side® rating for large companies dropped to 2.6/5, while the average expenditure per employee fell to 41 euro per year. This can be explained by the intrinsic organisation of large companies that manage multiple small sites. It seems that, through their organic and/or external growth, large companies are struggling to enforce their centralised procurement policies at their smaller sites.
Finally, the management of tail spend within the construction industry varies greatly. Two intrinsically linked challenges remain: the deployment of contracts and the digitalisation of transactions.
- For more details, download the tail spend barometer for the construction industry
A new industry will be analysed each quarter. The next industries to be examined will be the transport, automotive, energy, aviation, petrochemical and service industries.
 French industry classifications