Definitions of tail spend vary from organization to organization. Some companies draw a clear line and define their “tail” as the bottom 20% of spend covered by 80% of their suppliers. Others designate all off-contract purchases as tail spend. Still others use the term to define their entire profile of indirect spend.
Regardless of how an organization defines “tail spend”, most are consistent in how they approach it. Simply put, they’re not currently treating it with the attention they ought to.
In this episode of the Source One podcast, host Kelly Barner and Anthony Mignogna, a Director at Source One, a Corcentric company, discuss the challenges and opportunities associated with addressing the ‘final mile’ of spend management: the long tail.
Even once an organization captures their definition of tail spend, they still have to overcome (or improve upon) how they perceive that spend. A negative opinion of tail spend usually leads to avoidance and procrastination while savings, compliance and risk mitigation opportunities go unrealized. In fact, looking at tail spend as though it is the only spend can generate an impressive ROI, especially if the company is willing to consider a mix of tactics that include automation, services, GPOs and catalogs.
In this discussion, Anthony addresses the following topics:
- What a poorly managed tail looks like compared to one that has been efficiently addressed using one or more methods
- The potential implications of allowing an unmanaged tail to fester
- Industry best practices for managing the tail and the ROI associated with those efforts
Thanks for listening to this episode of the Source One podcast. To learn more about Source One and their approach to tail spend management, visit SourceOneInc.com.