Did you know that 80% of the transactions in a typical American procurement department are tail spend? Father of Modern Management, Peter Drucker once said, “You can’t manage what you don’t measure.”  Tail spend as we know is spend that is not actively managed and may lead to all sorts of financial difficulties for procurement departments. To echo Benjamin Franklin, “Beware of seemingly ‘little’ expenses for a small leak will sink a great ship.” Paraphrasing, poor tail spend management can have disastrous consequences. Fortunately, you can take charge of the situation and use these steps to your procurement advantage.

Step 1: Identify Your Tail Spend

You cannot improve procurement or get procurement advantage if you don’t know what your tail spend is. Depending on your business, this can be anything from one-off items you purchase such as software to professional services sought during a crisis, or maverick spend. Usually, these purchases don’t happen often or are deemed too small to pass through regular procurement. Part of tail spend management involves sitting down and developing a strategic spend management plan. This means identifying your hidden-, head-of-, middle-of-, and end-of-tail spend.

Step 2: Use Data Visibility to Improve Internal Operations

One of the key objectives of tail spend management is to improve tail spend data visibility. It is not unusual to have contract management and procurement running on different systems. However, this is often the biggest reason tracking the data is difficult. With the help of ProcurePort tail spend management software, the procurement process is contained in one place. This data visibility can be used to make key business decisions and improve internal operations.

Step 3: Make Better Procurement Decisions Based on Derived Data

The data you’ll glean from using proper software is invaluable. To get the most out of your tail spend management efforts you must make a conscious effort to start making better procurement decisions. What does this look like?

·         It means cleaning up your supplier list

·         Working on your sourcing and contracting processes

·         Making use of complementary procurement solutions

With a solid strategic spend management strategy in place and an e-procurement solution, it’s only a matter of time before your business begins to enjoy the benefits of efficient tail spend management.

Insider Tip: Metrics Are Everything

Tail spend management has at its core bringing to the foreground and to your attention spend that’s outside regular procurement so that you can improve current operations. Take advantage of metrics like transaction costs, cost reduction, and avoidance to gauge your improvement in managing your tail spend.

Potential Benefits of Efficient Tail Spend Management

There are numerous advantages to be had when using these tips to your procurement advantage. For example, you can enjoy significant savings thanks to your careful management of spend. How much do you stand to save? As much as 20% with spot buying.

In addition, well-managed spend increases the chances of being compliant in your business practices. By eliminating irregular suppliers from your database you can decrease risk. Thanks to procurement software you’ll be able to identify, monitor, and track all purchases enabling you to reduce rogue spending.

Lastly, an efficient tail spend management is one that’s easy enough to be used by all employees in the workplace. It’s a system that brings clarity to tasks within the workplace and designates key contact people. In a nutshell, watch as your process cycle times are significantly reduced after integrating e-Procurement software that works with your team.

Work With the Best in the Business

With experts talking of a possible recession and the economy struggling, companies are facing immense economic pressures and decreased revenues which in turn is complicating procurement operations. ProcurePort tail spend management software simplifies procurement and makes managing your company spend easier during these uncertain times. To learn more about this revolutionary technology request a demo today. Keen to find out more? Get in touch with us today for more information regarding tail spend management software for your business.


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