Addressing Tail Spend: The First Step

By Kevin Frechette
Apr. 17, 2018, 7:03 PM
Addressing Tail Spend: The First Step

Until recently, tail spend has generally been ignored by large, corporate procurement departments; assuming that it was not worth the time and investment. But it seems that in 2018 it is finally getting its time in the sun. Gartner, Spend Matters, our team at Fairmarkit and others have identified this spend as an issue to be addressed and have also projected that players like Amazon Business will have a large role in addressing the problem. Whether or not your procurement organization is in the position (or even has the desire) to address tail spend it is something that is likely on your radar.

With the 80% of purchases that tail spend represents and the data that comes along with that, it is no shock that addressing the problem is a huge undertaking. The sheer quantity of data alone is enough to send many CPOs running. At Fairmarkit, we’ve recognized the gap between the desire to address the problem and actually knowing where to start. Through our Free Data Review offering, we’ve created an easy entry point to address tail spend with no financial risk. Tail spend amounts to about 20% of a budget, so when given the chance to evaluate the actual savings and cost-benefit of addressing tail spend, many organizations wonder why they didn’t address it earlier.

In a recent pilot engagement with Fairmarkit, one company was able to:

  • Greatly increase the volume of bids received and vendors engaged
  • Collect data points to analyze on activity and outputs
  • Achieve 25% savings on one purchase

Through the Free Data Review, Fairmarkit offers an easy starting point for companies to standardize and streamline their small purchase processes to ensure procurement can effectively manage and source tail spend. To learn more about the process and our recent pilot with YETI, click here.

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