Controlling tail spend
10th November 2014
While emphasis on the core purchasing categories that have the potential to make a strategic impact is to be expected, care should be taken not to neglect the spot buys, one-off purchases and maverick spending that are to be found in nearly every organisation.
Individually these sundry purchases may seem inconsequential from a financial perspective. Yet, if firms took the time to analyse their total off-contract spend they may quickly come to form a different impression.
Off-contract spend, or tail spend as it is known throughout industry, accounts for approximately 20% of total procurement expenditure in the average firm. Reliable estimates suggest that anywhere up to 20% of tail spend is waste. To put this in monetary terms, a firm with a total procurement budget of €10 million is possibly losing in the region of €400,000 through inefficient tail spend purchasing. No wonder tail spend is becoming the new front in reducing costs and streamlining the procurement function.
Click on the whitepaper below for more information about controlling tail spend.
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