What is meant by Tail Spend in procurement?
What is Tail Spend?
Tail spend is the portion of a company's spending on making purchases that is typically less than 3% of the total. It can include office supplies, travel expenses, and professional services. While it may seem like a small amount, tail spend can represent a significant opportunity for cost savings.
Businesses should consider taking a strategic approach to tail spend in procurement for several reasons. First, because it is a small portion of the total budget, it is often overlooked and therefore presents an opportunity for cost savings. Second, because tail spend in procurement is typically less visible, it is easier to negotiate better terms with suppliers. Finally, because tail spend is often less strategic, it is less likely to be subject to the same level of scrutiny as other expenditures.
By taking a closer look at tail spend, businesses can find ways to save money, skyrocket sourcing process systems, boost spend visibility and improve their bottom line.
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