Fairmarkit hit the procurement scene in 2017 with the objective of disrupting the procurement landscape so long dominated by complex providers like Oracle and SAP and giving enterprises the tools they need to automate their supply chain operations. It characterises itself as the intelligent sourcing platform that empowers its partners to more efficiently purchase the goods and services they need. “We make the procurement process minimal touch for staff and effortless for buyers,” says Fairmarkit's co-founder and COO Tarek Alaruri. “Despite the widespread adoption of procurement software solutions packaged with traditional ERP systems, companies are realising that their procurement teams are tied by the tail, and spend too much time managing low-value contracts.” On the face of it, this is a typical Pareto issue. Procurement departments focus on large, multi-year contracts because of the larger savings realised - ignoring almost 20% of their spending.
But tail spend in reality makes up about 30% to 40% of a company’s total spend and about 90% to 95% of their total purchases. Most procurement functions devote little attention to managing tail spend because it’s so complex. To manage tail spend effectively, companies need to leverage intelligent sourcing and structured data to transform the way buyers are sourcing, purchasing and optimising tail spend. According to Boston Consulting Group, companies that used digital data to manage tail spend cut annual expenditures by up to 10%, Alaruri says.
Within four years Fairmarkit attracted global interest, winning multiple awards, and was in partnership with a host of large and small organisations, including global giants like PCI Pharma and BP, helping power their digital procurement transformation. Recently the $1.3bn multinational pharmacological provider Walgreens Boots Alliance (WBA), realising that they were putting way too much of their time and resources into managing their non-strategic spend, brought Fairmarkit in to address the problem. “Helping them to use their existing tools and processes to get better prices in a faster timeframe – reduce cycle times, increase operational efficiency and maximise cost savings. All that, and the need to make their supplier base more diverse and sustainable are things we have been able to do effectively. The ticker for big enterprises is that their time to value is incredibly short – that was a huge benefit and one of the deciding factors for them.”
Fairmarkit bolts on the customer's SAP VR API, he explains. “We are helping identify within their existing supply base, other customers' supply bases and other data sources the vendors that can sell that service. We are going out and doing all the front-end sourcing work and pushing it back into their SAP system so they can drive a higher value and drive more savings. Enterprises of the scale of Walgreens can take anything up to a week to process an order – it's a very cumbersome process, but with Fairmarkit we can cut that to a couple of hours. Our customers on average see 30% cost savings, 80% operational efficiency gains and a dramatic reduction of cycle time to within a matter of hours.”
Savings of this magnitude are clearly a massive benefit to stakeholders, making sense of the speed at which the company has grown and secured the investment it needed since its launch. “It's a pleasure to work with the team at WBA. They really understand our principle, that rather than just throwing people and fancy tools at the problem, it's vital to define the business outcome they need to achieve or the problem they face, and then let technology be the catalyst for the solution.”