Tail Spend Management: Spot Buying vs. Tactical Buying

Spot and tactical buying are next in this series on tail spend management. Do these two concepts differ or are they the same, and do they affect tail spend management?

We know strategic buying accounts for 80% of purchases and:

• Prepared, generally in advance
• Structured to consider company needs and supplier capabilities
• Known for long lead times

Compared to tactical buying:

• Used to get extra parts for a service technician or goods needed to run a production line.
• Usually individualistic and short-term, treating each transaction as a unique exercise.
• Not usually considering company needs or supplier skills.

Does this suggest spot and tactical purchasing are similar?

No. Despite their similarities, tactical buying usually involves known/pre-approved suppliers and short-term pre-planning.

Genuine spot-buying:

• Usually unforeseen, such as to fix equipment failure or restock products that have run out and are harming the organisation or individuals.
• Mainly minor orders for one-time needs
• Usually paid and delivered immediately.

Unfortunately, spot buying is often necessary even though better planning may turn it into tactical or strategic buying. Improve cost and management control over spot buying when it happens.

One of the best ways to stop “maverick” buying—users placing orders wherever they please, e.g. from Amazon or eBay or from suppliers they know—is to require all spot buy purchases to be placed via a single solution, driven by advanced software and supported by skilled procurement professionals.

Advantages of this method include:

1. Simplicity. Users may easily identify and buy what they need to complete their jobs and keep operations running smoothly from a large choice of listed things, or they can report their needs in the system and get expert advice.
2. Cost-effective Supply. Items can be ordered from various pre-approved providers, including many unknown ones.
3. Greater control and visibility. Because spot buy purchases are now channelled through a visible and reportable channel, management and control are improved.

This implies spot buying is more tactical, improving tail expenditure control in the organisation.