Procurement focuses more on large spends than on tail spend. However, if you do analysis, you will realise that tail spend has huge potential to save your organisations thousands of pounds each year. To ensure effective tail spend management, here are some things that you would have to address:
Make tail spend more transparent by performing in-depth analysis. You will work out the things that each department buys and how best you can source them through approved suppliers. You will be able to categorise the spends and plan how to tackle this spend at supplier or category level.
Centralise tail end spend
Rather than letting different departments in your organisation make maverick spends, create a sourcing helpdesk in procurement to cater to internal stakeholders’ procurement needs. Be proactive and learn about the needs of the departments to onboard them to use the sourcing helpdesk. The aim is to ensure that procurement handles all spends, even one-off purchases.
Learn about local suppliers
Usually, tail spend is limited to supplies from local vendors. So, you must learn the local marketplace well so that you can choose the best suppliers for tail spends. Also, this will enable you to negotiate contracts with suppliers that are favourable to your organisation.
Best practices for tail spend management
Organisations opting for centralised tail-end spend adopt the best practices for purchasing and reduce the number of suppliers, enjoying maximum savings in tail spend. You must work closely with the internal stakeholders to learn their requirements and then use a tactical procurement model to cater to their needs.
Use technology to support processes, to get the results you desire. Adopting the best practices will help realise significant savings in a calendar year.
Procurement professionals recognise that tail spend management is essential for an organisation, especially in a competitive market. Address the challenges associated with tail spend and you will reap the benefits. If you are new to procurement, tail spend management could be your goal as you learn your job.