Is Automating Tail Spend Management a Viable Option?
As more companies realize the value that comes from prioritizing tail spend management, they may face resource challenges trying to get a handle on everything. From purchase approvals to supplier sourcing to invoice management, procurement has a lot of moving parts, and the large number of small transactions that comprise tail spend can be difficult to stay on top of.
However, the rise of automation tools — including e-procurement platforms that centralize and automate tail spend purchasing and data management, as well as solutions for invoice management, contract management, and more — provides companies with a viable option to gain more visibility, control and potential cost savings.
While tail spend management still requires a human element, such as for aligning tail spend strategy with overall corporate strategy, automating the non-strategic parts of tail spend management can pay significant dividends for companies.
Automating Data Capture and Analysis
A large component of automating tail spend management includes setting up a system to automatically collect purchasing data so that companies can move from tail spend being an unmanaged area of spend to one where they can account for all purchases and start to optimize this area.
One way to accomplish this data capture is through the use of an e-procurement platform, where employees make purchases directly through the software so that the purchase data automatically gets collected. Similarly, companies can connect payment methods like p-cards to a spend management platform so that even if a purchase is made outside of an e-procurement platform, the spend data can still be captured.
However, the more companies can direct employees to make purchases within e-procurement platforms, the easier it generally it is to capture full spend data while automating other areas like purchasing controls and budget analysis.
For example, finance and procurement teams can set up automatic approvals if purchases fall within certain budget restrictions and compliance controls. Some e-procurement platforms may also be able to then suggest purchases based on an analysis of past activity as well as looking at remaining budgets. A global survey of chief procurement officers by Deloitte finds that analytics is the technology area most expected to impact businesses over the next two years. Automating data capture is necessary to make analytics possible, and some tools can go a step further to actually provide automatic analysis to optimize tail spend management.
Automating Supplier Management
Another key area where companies can add automation is supplier management, which can include everything from managing RFPs to processing supplier invoices. Many of the tasks within this area are repetitive and straightforward enough that with the right data, they can be automatically managed.
For example, instead of having employees spend time manually entering data from invoices and passing back and forth attachments over email, which can easily lead to errors and missed messages, a variety of automation tools exist that can capture the data from an invoice and automatically send it for approval to the designated person or department.
Similarly, some e-procurement platforms can save time by learning from past purchasing activity and other stored supplier-related data to automatically generate RFPs. These platforms may also be able to automatically track supplier delivery efficiency and related data to better inform supplier-related decisions, such as helping companies negotiate better rates with suppliers.
Because the purchases that comprise tail spend can include a large number of vendors, having a degree of automation ultimately helps companies better understand their suppliers without needing to dedicate as much time and effort as they would otherwise. As a result, automating tail spend management frees employees up to focus on more strategic areas like building out a supplier diversity program and linking procurement efforts to other areas like marketing.
To learn more about how your business can benefit from automating tail spend management, get in touch with GoProcure today. You can also learn more about how our platform improves the full procurement lifecycle.