Tail Spend Management is the hottest topic of the present age. The reason is that there are many companies that are unable to manage their Tail spend. This is the reason authorities are worried that how they would be able to generate profitable results because they are unaware of the fact that where 20% of their investment is spent. No doubt it is important for the companies to save this tail spend. But they will be able to save it only when they know how to invest it properly. Here we have everything you need to know about the management of tail spend for profitable results in the long-run.

Tail Spend Management

Most of the companies make millions of purchases every year for the management of their supply chain. In this data, some of the purchases are so small that procurement will not add the information in the data or it will not be included in the vendor catalog because of the infrequency of purchases. These purchases are commonly known as tail spend. In most companies, you will see the following stats.

1. 80% of the suppliers will become the cause of bottom 20% spend of the company.
2. 20% of the business spend is because of the 80% indirect suppliers.

You will be surprised to know that in most companies 60 to 80% of the transactions comprises of the tail spend.

What is the importance of Tail Spend Management

Before we can teach you to tackle the tail spend, it is important for you to understand that why you need it for the progress of your business. most professionals say that in case of tail spend it gets hard to determine that what were the reasons for the lack of time and resources. Most managers have the misconception that such type of spends cannot be justified and this is the reason they will ignore it completely.

However, there are many companies that have been able to increase their benefits and cost savings with the help of Tail Spend Management. Here are some of the advantages that you will get once you tackle tail spend.

1. It will increase saving between 15 to 30% of the companies
2. It will provide better control over the expenditure
3. You will have visible data that how you are spending the money.
4. It will surely improve your compliance with contracts.
5. You will be able to prevent the company from spend creeps.
6. It will allow predicting some of the future cost.

Ways to tackle Tail Spend

You must have understood the importance of Tail Spend Management and that is why there are many managers who are interested in learning the trick. Here we have included 5 simple ways that will help you with the management process.

Managing spend analytics

The first task you have to consider is the management of the spend analytics. It is important for the team to collect data related to even a single penny that has been spent in the company. Whether it is important or not you have to assure that you collect all the associated date and arrange it properly. After that, you have to deeply analyze the data and find out the reasons for all the purchases that you have made. In case there is some kind of information that is ambiguous or you are sure that some of the purchases are useless to assure that they will not happen again. It will help you save money.

Compare and negotiate

When you are planning to buy something, it is important that you have a complete access to the online marketplace, suppliers and stores. There are many stores available online that have the complete collection of the products that you have been looking for. In this way, you will come across many suppliers and there will be more options for you to select from. You will not be limited to a few suppliers. You can compare the rates and quality of products or services on different platforms. It will allow you to negotiate the price to assure that you can get the best products at the lowest possible rate.

Get information about local supply market

Once you have collected all the data and information that you need from the online market, it is important that you pay attention to the local market as well. In some situations, the products available online are expensive as compared to the local market because of the addition of delivery charges and other issues. You should get complete information related to the original price of the products because these are some of the facts that will help you in the management of the rates as well. You will be able to negotiate properly only when you are aware of the original price.

Get continuous reports

A commons mistake that most managers make is they do not generate the reports related to the procurement. The reason is that they think they are managing everything perfectly. However, in reality, they are still making some mistakes that can be only identified in the reports. It is important to get the procurement reports once you notice that you have managed everything professionally. In the beginning, it would be hard for you to understand the reports properly and the mistakes that you have made. However, with the help of a guide, you can manage everything professionally.

Bottom line

If you are having some issues during the Tail Spend Management it is important that you outsource the services. there are various companies that are providing reliable procurement Tail Spend Management services. It means that you will not have to deal with any issues related to management of the tail spend. The experts have all the latest tools and technologies that you need for the processing. Make sure that you let them examine your system because they will provide you with the best advice and accurate reports related to the changes that you will have to make.

Contact us today to know more about how Simfoni’s technology and processes can help your organization achieve world-class Spend Analytics , Savings Tracking & Tail Spend Management Solutions