What is Tail Spend?
In the world of procurement, tail spend refers to the relatively small, decentralized purchases that fall outside of an organization's strategic sourcing initiatives and contracted supplier relationships. These purchases can include everything from office supplies and IT equipment to maintenance services and travel expenses. While individually these transactions may seem insignificant, collectively they can account for a substantial portion of an organizations overall spend – often ranging from 15% to 25%.
The Challenge of Tail Spend Management
Tail spend is notoriously difficult to manage due to its fragmented nature. With numerous employees making ad-hoc purchases across various departments and locations, it can be challenging to gain visibility into this spend category. Additionally, the lack of centralized control and negotiated contracts can lead to inefficiencies, such as overpaying for goods and services, duplicating purchases, and failing to leverage an organizations buying power.