Published June 2018
Tail Spend is a phrase that is commonly used to describe the spend that a company is making, but not accounting for or managing strategically through the company’s procurement policy.
Tail Spend falls outside of the main purchasing processes associated with the direct business line of an organisation and is usually not effectively managed by the procurement team, as it is seen as non-Strategic spend.
Tail Spend can fall into a number of categories, for example:
| Focus Area | Tail Spend | Strategic Spend |
|---|---|---|
Number of suppliers in the market | High | Low |
Number of suppliers being used | High | Medium |
Number of categories of spend | High | Medium |
Average transaction $ | Low | High |
Number of transactions | High | Low |
Number of decision makers | High | Low |
Procurement control | No | Yes |
Number of requisitioners | High | Low |
Number of suppliers per Procurement Manager | High | Low |
Maverick spend issues | Yes | No |
Multiple Business Units and many people involved | Yes | No |
Achieving impact (savings / controlled growth) | Difficult | Easy |
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