State of Tail Spend Report: Shining a Light on the Enterprise’s Million Dollar Opportunity

September 8, 2021

Every year, enterprises are leaving millions - if not billions - of dollars on the table and it has nothing to do with their core product or service. Believe it or not, it comes down to the way they spend money on “tail spend” items - things like laptops, janitorial services, office supplies, and yes, even toilet paper. In a world of large contracts, it may not seem like items like these would fall to the top of an enterprise’s priority list, and yet, tail spend items make up 20% of an enterprise’s annual spend - a significant portion of a company’s budget (especially for global companies with total expenditures in the billions).

Unfortunately, despite this reality, tail spend purchases don’t get much procurement attention or oversight. Up until recently, they’ve been managed by archaic technology, manual processes, or procurement professionals who aren’t authorized to make such purchasing decisions without approval or input from corporate.

But the days of tail spend neglect are behind us. Over the past five years, tail spend has come into focus for enterprises due to a variety of factors: supplier risk, operational risk, and bloated costs, all of which became amplified by the COVID-19 pandemic and our crumbling reliance on global supply chains.

Finally, the world is waking up to tail spend, and now we have the data to prove it.

Today we’re releasing the first ever report on tail spend trends - State of Tail Spend - developed in collaboration with the Hackett Group. The Hackett Group gathered responses from 50 procurement leaders at some of the largest companies in the world to understand the ways that tail spend has changed over the past year, and where it’s going next.

Here are some of the insights that stood out as they analyzed the responses:

Enterprises are no longer sleeping on tail spend:

Over 75% of respondents said that managing tail spend is a priority within their organization, with almost half of those respondents identifying it as a top priority.

It’s not only a large chunk of an enterprise’s annual spend; it’s also the majority of their supplier base:

The majority of respondents said that 80% of their supply base is tail spend vendors.

The savings opportunity is tremendous:

While respondents recognize the importance of managing tail spend, almost two thirds of respondents have seen minimal savings (<3%) with their tail spend management programs thus far. Meanwhile, almost 60% of respondents believe that 7%+ savings are achievable.

Traditional tools don’t cut it:

Old school tools like electronic requisitioning and catalogs are the most common ways that respondents are trying to manage their tail spend; The top challenge in managing it has been around lack of data integrity and visibility, with half of respondents having little to no visibility into their tail spend—25% of spend or less.

Enter, Fairmarkit - faster, simpler, smarter tail spend sourcing

The data makes it clear: Enterprises are sitting in front of a huge opportunity to embrace new, best-of-breed tools that break with tradition to unearth greater savings and efficiencies within tail spend purchases than ever before.

Fairmarkit started four years ago because we knew how much money an enterprise could save if they just focused on this core - and too often neglected - area of procurement. Back then, it was a trend in its infancy. Today, it’s front and center, and we’re here for it. We leverage data and automation to streamline and simplify the process of purchasing and managing tail spend, helping our customers realize savings (in both time and money) they never thought possible. Using our intelligent sourcing platform to source and manage tail spend purchases, customers like British Telecom, bp, Blue Cross Blue Shield Kansas City and more have saved at least 10% on their purchases, while saving 40% of the time spent by procurement staff and 60% of the time spent waiting for purchases to arrive.

We’re excited to partner with The Hackett Group on more data reports in the future so we can stay informed on the current challenges and opportunities in this emerging procurement category. For now, click here to read the full State of Tail Spend report.

Ready to uncover your million dollar opportunity? Get in touch and let’s talk intelligent sourcing:

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