Procurement Glossary & Terminologies
Tail spend refers to the spending that accounts for approximately 80% of overall transactions but makes up around 20% of the business’s spend volume. Tail spending often involves costly one-time purchases or low-value, high-volume purchases that are usually indirect and occur once every 2-3 years. Such spending is often overlooked due to a lack of adequate spend data and complexity which involves an enormous supplier base, wide product categories, and massive transactions
To get on top of their spend budget, businesses utilise tail spend management solutions that helps in analysing spend data, segmenting commodities, and identifying savings opportunities at the transactional and spend level.
Benefits of Tail Spend Management
Better savings opportunity - A smart tail spend management solution can help in devising sourcing strategies based on projected goals and getting competitive prices for goods/services.
Operational visibility - Centralised spend management gives end-to-end visibility of spend data across categories and suppliers to help procurement teams proactively generate insights.
Improved compliance to SLAs and contracts - Streamlining contracts and SLAs helps businesses make the most of their internal and external purchasing while monitoring transactional and additional costs.
Boost customer satisfaction - Taking charge of tail spend improves bottom-line capabilities of businesses, adds value, and nurtures internal satisfaction.
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