Tail spend management is a concept often referred in Procurement as the 80/20 rule, for many events, approximately 80% of the effects / benefits / cost comes from 20% of the causes / spend. This rule can be applied to many organisational practices.
This 20% of spend is known as ‘tail spend’ or ‘long tail’. Tail spend management is the art of managing your tail spend supply chain to optimise procurement and supply chains.
When it comes to optimising the supply chain it often makes sense to focus on the areas where the largest impact can be felt, namely the largest spend categories and the top contracted suppliers.
This leaves a ‘tail spend’ which typically accounts for 20% of spend and yet accounts for 80% of all suppliers.
Due to time and people constraints many organisations have failed to address this ‘non critical’ tail spend, assuming incorrectly that the investment in time and resources needed to review the tail spend would not justify the end savings.
Optimising the tail spend supply chain can deliver significant cost savings and allow for many benefits including taking the costs out of your procurement process, leverage spend, increased purchasing control and increases visibility of expenditure.
Odesma is able to address your tail spend management and allow your organisation to save in all areas of procurement. Odesma has e-procurement and e-catalogue solutions to minimise the cost of tail spend, and drive value from third party low value spend.
Attendees at the US Institute of Supply Management (ISM) conference this week came away from an illuminating panel discussion addressing the issue of category management with three key focus areas for extracting business value. Contributors to the debate included...read more