Tail-Spend Management

The term ‘tail-spend’ comes from the Pareto principle, which states that 20% of your suppliers will account for 80% of your spend. Accordingly, 80% of your suppliers will account for 20% of your spend, and this ever-thinning series drawn in a graph looks like a tail.

Procurement organizations traditionally spend little time and effort on the ‘tail-spend’ because it is generally thought that the items are difficult to leverage and offer small savings opportunities. Lacking data to contradict this belief, procurement organizations focus their energy on areas perceived to be of higher value.

However, using spend analytics, GEP sourcing professionals can help identify and achieve significant savings in this tail-spend.