Tail Spend

Reclaiming Value with Strategic Contract Lifecycle Management

Posted: 07/09/2021 - 09:00
Reclaiming Value with Strategic Contract Lifecycle Management

Poor contract management costs businesses up to 9% percent of their annual revenues.  Contracts determine the flow of an organization’s finances and directly impact customer satisfaction, savings, risk exposure and productivity. However, organizations can have thousands of working contracts at any given time—each with their own set of set of risks, terms and expectations.

What is Tail Spend?

Posted: 06/10/2021 - 09:00
What is Tail Spend?

Just like in spend data classification, the definition of tail spend is subjective. Some organisations classify tail spend at the bottom 20% of spend, while others might set a financial level such as £100,000 or £1 million.

According to CIPS, tail spend “can often be referred to as rogue spend or maverick spend, is usually small value purchases that are conducted by the organisations outside of a contract and often outside of the awareness of the procurement team.”

Tail spend goes beyond the typical 80/20 rule

Posted: 08/24/2020 - 05:27
When you think tail spend, don’t just think of the typical 80/20 rule.

Having a sound tail spend management strategy has never been more important than it is today. It’s a key differentiator – and competitive advantage – in a down economy in which cash is king and cutting costs is a high priority. Procurement teams can no longer rely on direct materials for savings—those costs have been negotiated to death.

How Print E-Sourcing Helps Tame the Tail

Posted: 06/19/2019 - 06:16

Managing tail spend has been a major topic of discussion among sourcing professionals for at least the past two decades. In most companies, external spending has a Pareto-like distribution – the largest 20% of suppliers (by dollar volume) typically account for about 80% of the total external spend. Tail spend is generally defined as the 20% (or so) of the total external spend that is attributable to the smallest 80% of suppliers.

Why CIOs Should Worry About Tail Spend Management

Posted: 08/19/2018 - 05:57
“Tail spend” represents a significant cost for large enterprises. While comprising a relatively small portion of total cost, the drip-drop accumulation of spend by large numbers of small, non-strategic suppliers making ad hoc and one-time purchases adds up to represent a sizable sum. The issue is exacerbated by inefficient contract management, cumbersome payment processes and a lack of automation.
 
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