Is Software Required to Manage Tail Spend
Tail spend is also known as maverick or rogue spending, is spending that is unmanaged or unaccounted for within a company. Managing tail spend in procurement and the entire supply chain process is vital; poor tail spend management can lead to considerable loss. It’s estimated that just 80 percent of suppliers represent just 20 percent of an organization’s spend—so where does the other 20 percent go? The right tail spend software and procurement software can help you keep track of rogue spend by using tools such as tail spend analysis. Read on to learn more about tail spend software and how it can help in your overall supplier management and procurement management.
Tail Spend Software: Identifying Tail Spend
One of the first pieces to manage tail spend is identifying where it is. Tail spend automation software can help accomplish this. Procurement tail spend usually falls into one of several categories:
- Lack of awareness
- Ambivalence when managing tail spend
- Redundant or mundane purchases
- Complex contracts
- Poorly optimized tail spend software and lack of spend management
Software can discover where rogue spend is by using spend analysis. These reports can determine how much you are overpaying due to people making buying decisions without controls or professional procurement advice.
Using Tail Spend Software for Management
As a manager, tail spend software must be intuitive to you, but it also must be easy to use so that all stakeholders embrace it. If it’s too complicated, this can confuse. It would help if you choose centralized software easily integrated with an existing ERP. You may want to look for additional spend automation tools and other features, such as:
- The software has both a desktop and mobile interface
- The software must have generous storage to store and analyze all the data
- The suite takes the same amount of time to process large numbers as it does smaller ones – no extra waiting time
- Your software supports phone calls and emails
You may find for your particular company that other features of tail spend software are necessary as well, beyond the basics.
Tail Spend Software: Minimizing Tail Spend
The best tail spend software in the world can’t help if you’re unsure of the next steps. After you’ve performed a spend analysis with your software, look over it with your team to look for rogue spend. It’s also important to communicate with your team about the importance of controlling tail spend. Perhaps mundane purchases have been continually made, and your team member didn’t realize. Make sure everyone is on the same page.
Suppose you think this isn’t enough for the situation. In that case, you can always utilize software controls so most people can only purchase from approved suppliers or use a buying desk to facilitate the purchases. This may take an extra step (for you to approve purchases), but it can help minimize your tail spend in the long run.