One of the ‘Big 4’ banks in Australia had a significant number of suppliers with very low spend. It recognised that it needed to reduce this ‘tail’ of suppliers to reduce administration costs and allocate the spend to its strategic suppliers. However, the in-house sourcing team was under-resourced at the time and did not have the capacity to complete the project.
To complete the full Supplier Tail Management Project, which included:
- Review and categorise the tail of current suppliers below a specific spend level.
- Developed and implemented a tail management strategy.
- Develop the new tail management policy and align with the current procurement processes.
- Managed the tender/sole source negotiations process for each category of spend.
- Developed new contracts with the selected suppliers, or allocated spend to strategic suppliers.
Caliba delivered the following outcome for the client:
- A new supplier onboarding policy and procedures in place to ensure the supplier tail does not grow to previous levels.
- Reduced the number of suppliers by 25% within 3 months of the strategy implementation.
- In excess of 15% cost reduction for the spend in scope due to the consolidation of spend with selected suppliers.