Don't manage tail spend – eliminate it
There is perhaps one area of procurement that does not get the attention it deserves – tail spend. Dismissed by some CPOs as “pocket change”, it could be described as the forgotten child of procurement or the one that got away.
Tail spend has been defined as the 10-20% of spend accounted for by 80% of an organisation’s suppliers, so vast numbers of small low-value transactions. But don’t underestimate the value of these transactions – they can represent millions of pounds of spend and large potential savings.
Traditionally, procurement has decided the time and effort required to limit tail spend, let alone eradicate it, is not worthwhile. But the technology now available – with its visibility, analytics and controls – means the cost-benefit analysis must be run again. Read this CIPS Download report, produced in partnership with GEP, as we explore why procurement organisations need to think differently about their capability.
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