{"id":28990,"date":"2017-06-30T09:30:25","date_gmt":"2017-06-30T14:30:25","guid":{"rendered":"https:\/\/simfoni.com\/?p=28990"},"modified":"2022-06-07T06:23:05","modified_gmt":"2022-06-07T11:23:05","slug":"does-tail-spend-really-matter","status":"publish","type":"post","link":"https:\/\/simfoni.com\/spend-forecasting\/does-tail-spend-really-matter\/","title":{"rendered":"Does Tail Spend Really Matter?"},"content":{"rendered":"

The generally accepted definition of “tail spend<\/span><\/a>” is the bottom 20% of purchases made by an organization (by value, volume, or both). The Pareto rule is also usually applied to tail spend<\/span> in regard to suppliers, i.e. tail spend<\/span> purchases or Low Value Spend Management<\/span><\/a><\/strong> represent the bottom 20% or purchases, but very often 80% or so of suppliers are connected to this activity.<\/p>\n

Because it only makes up the bottom 20% of purchases, there is a tendency to take a “who cares?” approach to tail spend<\/span>, specifically in managing it better. After all, why waste often overstretched specialist purchasing resources on the bottom 20%? Most would rather focus on the top 80% — often referred to as strategic spend.<\/p>\n

Read More –<\/strong> 6 Ways to Support Supplier Diversity<\/span><\/strong><\/a> by Increasing Supplier Spend to Minority-owned, Diverse and Small Businesses.<\/p>\n

However, tail spend<\/span> really does matter. In many businesses, improved tail spend management<\/span><\/span> is the most overlooked way to reduce purchasing costs and gain even more control over all procurement<\/a> activities.<\/p>\n

This is especially the case in businesses that have already focused a lot of resources and time on streamlining their procurement<\/a> operations. If the strategic spend function is about as efficient as it can get, there is not much scope for achieving further savings or gaining more control of the process.<\/p>\n

In this case, reforming and improving tail spend<\/span><\/a> \/ Low Value Spend Management<\/span><\/a> <\/strong>practices within the organization is essentially the “last frontier” when it comes to procurement cost reduction<\/span><\/a>.<\/p>\n

Poorly managed tail spend<\/span> can be a major area of cost and resource wastage and can expose the business to a variety of risks, so it is vital that some emphasis and management priority is placed on this area.<\/p>\n","protected":false},"excerpt":{"rendered":"

The generally accepted definition of “tail spend<\/span><\/span>” is the bottom 20% of purchases made by an organization (by value, volume, or both). The Pareto rule is also usually applied to tail spend<\/span><\/span> in regard to suppliers, i.e. tail spend<\/span><\/span> purchases or Low Value Spend Management<\/span><\/span> represent the bottom 20% or purchases, but very often 80% or so of suppliers are connected to this activity.<\/p>\n","protected":false},"author":1,"featured_media":28991,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"give_campaign_id":0,"footnotes":""},"categories":[447],"tags":[462],"class_list":["post-28990","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spend-forecasting","tag-low-value-spend-management"],"yoast_head":"\nDoes Tail Spend Really Matter? 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