Tail Spend Management: Hype or Real?

While tail spend management has traditionally been more of an afterthought compared to larger, more strategic spending, these small purchases can still add up to significant amounts and affect organizations’ risk management, employee experience and more. Fortunately, more procurement leaders are paying attention to tail spend now, particularly with the advent of e-procurement platforms like GoProcure making it more feasible to easily manage a high volume of suppliers and purchases.

However, as with any new technology or business practice like digital transformation or AI, there’s potential for companies to get caught up in the hype around these areas rather than focusing on what’s feasible and what can deliver both short- and long-term value.

To avoid the hype and focus on what’s real with tail spend management, procurement leaders should try to answer key, practical questions such as:

How Can I Improve Tail Spend Visibility?

One of the main reasons why tail spend management is so important is because companies too often do not have visibility in what they’re purchasing and from whom, other than with Tier 1 suppliers. As such, procurement leaders should look to implement processes and technology that capture all tail spend purchase data, including who within the company made the purchase, what products the purchase entailed, who the order was from and how much the order was for.

This data should then be easily accessible to relevant leaders within companies, including chief procurement officers as well as those outside procurement, such as CFOs. E-procurement platforms can automate this data capture, but it’s still up to employees to make use of this visibility to find cost savings, identify risks and find other ways to add value.

How Can I Improve Tail Spend Sourcing?

Better tail spend management should also include simplifying sourcing, since there may be significantly more vendors in this area of spend compared with larger, more strategic purchasing. However, simplifying sourcing does not need to mean reducing the number of suppliers, but rather making it easier to find and analyze these vendors.

E-procurement platforms often have their own supplier networks that you can access and search online, which tends to be easier than trying to order from supplier catalogs. Digitizing supplier management also makes it easier to compare bids and look at data such as order history and delivery accuracy to help with negotiations with certain suppliers. Procurement leaders should also look for platforms that make it easy to produce RFQs when looking for specific products or services that may be a bit more complex but which still fall into the category of tail spend.

How Can I Improve Tail Spend Efficiency?

Better tail spend management can also realistically make the entire purchasing chain more efficient. While you’ll want to avoid the hype that tail spend purchasing can always be essentially instantaneous and smooth, it’s certainly possible to streamline the process. That starts with making it easier for employees to find products and services within a digital platform rather than sifting through catalogs, and that should also extend to making payments and approvals more efficient.

The old methods of issuing corporate cards to every employee, having them enter payment information for every purchase and submit each expense afterward for finance to then have to reconcile can be unnecessarily complex. Instead, pre-approvals can be set up based on a company’s own policies in GoProcure, for instance, and the platform automatically generates a single-use virtual card upon purchase approval. These virtual cards can also be integrated into mobile wallets, so employees have more access to a streamlined process of approvals and payments whether they’re in the office or on the road, and the purchase data is automatically captured.

How Can I Improve Tail Spend Compliance?

The benefits of streamlining tail spend management within an e-procurement platform can also yield real compliance benefits. For example, implementing pre-approvals can help employees stay within an organization’s guidelines, and having more visibility into tail spend data makes it more realistic to spot compliance issues such as fraud or improper purchasing.

Here too, however, employees still have an important role to play in establishing compliance policies and analyzing data to spot issues, rather than falling into the hype of technology being able to solve all compliance challenges.

By focusing on these questions and identifying practical ways to better manage tail spend, companies can unlock more overall value for their businesses. And while technology in this area continues to improve, it’s important for companies to still implement and uphold strong procurement processes, rather than relying only on tail spend management hype.

To learn more about how your business can gain full visibility into spend and maintain frictionless purchasing protocols, schedule a demo with GoProcure today. You can also read more about how our platform improves the full procurement lifecycle.