Tail spend : controlling the product range and managing suppliers

Managing suppliers tail spend
March 22th, 2018
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It is essential for suppliers of tail spend to offer a product range that is just as wide as it is deep, if they are to fulfil their role as a one stop shop. However, this means managing hundreds of thousands of product references and consequently countless manufacturers around the world. Managing such a range involves identifying, listing and then publishing the required products, even those that customers only rarely need, while keeping track of the latest changes to the ranges in order to consistently offer customers an up-to-date and innovative array of products. At the same time, suppliers need to guarantee the quality and availability of each product reference and ensure access to all the necessary documentation (certificates, data sheets, warranties, etc.).

To address these challenges, Manutan recommends organising the procurement function according to three key areas.

1. Manage sourcing

Product origin and conformity are key criteria. In the case of branded products, they reassure customers that they have come straight from the manufacturer and are not counterfeit goods.

Similarly, a quality review process must be implemented to ensure product quality and stability, which includes consistently checking each delivery leaving the warehouse and auditing the production factories. This process allows the supplier to achieve a consistent quality rate, irrespective of the products' origin.

2. Set up an innovative SRM* system

The two main objectives facing a tail spend supplier are:

  • To ensure product availability
  • To meet delivery times

The survey that OpinionWay carried out in February 2018 for Generix Group confirms this trend: 63% of French people believe that product availability is the most important criterion for a successful purchasing experience, and 41% also include the ability to meet delivery times. To address these two major challenges, a significant part of the product range should be stored and managed in the supplier's warehouses, while the other part should be organised directly from the production sites, which is known as drop shipping.

To guarantee superior delivery quality, a dedicated team keeps tabs on all the suppliers and oversees the continual improvement plan. For example, Manutan holds a working day event with its 150 drop shipping suppliers and produces a KPI guide to monitor each supplier's delivery quality.

SRM systems also include a supplier portal providing access to all the operations (orders, deliveries, returns, etc.), as well as the necessary activity reports and documents. As such, the platform simplifies, accelerates and improves all the interactions with suppliers. As part of a continual improvement strategy, the portal is managed by a supplier advisory board, which is a project team of suppliers who are responsible for sharing their points of view and needs.

Finally, it is important to define a policy for improving the relationship with the company's suppliers. To achieve this aim, Manutan uses a "Net Promoter Score". Analysing the results and replies collected from surveys can be used to implement specific continual improvement plans for each supplier in each country.

3. Supplier ratings

It is vitally important to set up a rating system for all suppliers based on three criteria:

  • Product quality
  • Delivery times and fulfilment rate
  • Innovation

While the first two criteria (quality and delivery) serve to define the necessary improvement actions for each supplier, the entire rating system can be used to identify the "premium suppliers" every year who offer customers exceptional quality of service! This rating from Manutan brings premium suppliers a wealth of advantages, including:

  • Showcased products through joint marketing campaigns and communication with the sales forces
  • A dedicated space offering complete visibility of Manutan's teams (project managers, marketing and editorial teams, etc.) and the ability to easily contact them

Unlike distributors, marketplaces cannot always guarantee the origin or the quality of the products on offer. Ultimately, the best way of managing a tail spend range involves long-term investments, an effective organisation and true expertise in offering high-quality products of guaranteed origin, as well as an exceptional and consistent purchasing and delivery experience.

*SRM = Supplier Relationship Management