Tail-spend management headaches ease with new digital tech solutions

It’s a ubiquitous truism that procurement teams, especially in larger organisations and enterprises, have a…...

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It’s a ubiquitous truism that procurement teams, especially in larger organisations and enterprises, have a Sisyphean task on their hands with tail spend management, one of the opaquest areas of spend in any company. However, a procurement software entrepreneur believes that’s about to change with the advent of new AI and machine learning technologies supplied by procurement as service providers.

Software expert, Sandeep Gauba, who specialises in solutions for spend management, acknowledges that digital innovations, most of them derived from FinTech, have made huge advances in the world of procurement by enabling large enterprises to automate significant swathes of previously manual processes. Monotonous, paper-ridden tasks are decreasing, thanks to the rise of automated digital solutions for strategic sourcing, spend analytics, data integrations with enterprise resource planning (ERP) and accounting platforms, and digital catalogues. But disruptive FinTech technologies have not so far reached the vexed area of tail spend management – the zone of one-off purchases, shadow spend and rogue buys that procurement tools aren’t always able to capture. As much as 40% of company spend, Gauba says, remains in these shadows, as people tend to buy the items in a decentralised manner, beyond procurement’s data capture processes.

New technologies are starting to bring tail spend purchases into procurement’s data-gathering scope. Procurement teams, Gauba believes, can harness these technologies to great effect, but must first consider themselves as part of a bigger ecosystem, comprising not only the corporate and its vendors but also financial institutions and logistics providers in the supply chain.

Professionals need to have access to all tracking information capable of overseeing not only the flow of products but also the flow of funds. Technologies based on AI, machine learning, and blockchain are beginning to enable this interconnectivity of data, Gauba explains, allowing procurement to expand the scope of their internal controls on spending. He added: “The opportunity with AI and machine learning is humungous. And, honestly, we are all just scratching the surface right now.”

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