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Posts Tagged ‘tail spend management’

How to cut your tail spend by 80%

Tuesday, June 19th, 2018

The age old problem of unmanaged costs has driven established organisations to take drastic steps. Every organization strives to excel at – minimum input for maximum output, though what they forget is dynamic external factors. Best industry practices are a guiding path for new, growing and to some extent established businesses; however for tail spend management, it is crucial to form a structure that is best suited to your needs.

What is tail spend management?

In simple terms, tail spend is a series of small purchases that are either too big or impromptu to be handled by procurement agencies. Organisations are policy-driven with a stack of paperwork to be fulfilled for each transaction. Though this holds true in 85% of organsation based transactions, it may not be true for the other 15%.
Lengthy paperwork, redundant contracts, sudden demands, low quantity and unreliable vendors are all contributing factors to a significantly high tail spend. In the last decade, companies of all sizes have gradually shifted focus to sourcing, vendor management, tail spend management and resource management. What earlier was considered as extra, unnecessary cost, today has become a key area for organisations to focus.

The need to focus on core business

The ability for a business to focus on their core functional areas while at the same time maintaining low tail spends is optimal. However it is observed that attention on reducing tail spend takes away from the core business which leads to an unbalanced work structure. It’s best to employ a third party tail management agency which not only identifies areas that need attention but also predicts potential troubling areas and thereafter prepares a plan of action.

An effective strategy

Tactical buying, spend analytics and local market knowledge are significant areas through which an organization can concentrate on their progress rather than managing time consuming functions.
Analyse and construct a strategy that works for your business and turns extra tail spend into incremental savings. If this investigative process is not a feasible option for your business, it is best to concentrate on employing a third party agency which understands your business, industry and work ethics. Not only will a third party agency nurture your current work flow but will also bring in an uncomplicated approach to reduce tail spends.

Get in touch with our consultants for a more thorough understanding of tail spends and how you can reduce it for your organization. Write to us at atul.masih@ascgroup.in

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