When it comes to purchasing goods and services for a business, most organizations focus their efforts on managing the 80% of spend that comes from their top suppliers. This makes sense, as these top suppliers represent the majority of the company’s budget. However, the remaining 20% of spend, known as tail spend, often goes overlooked and unmanaged. This can lead to missed cost savings opportunities, inefficient processes, and a lack of visibility into overall spending.

Tail spend refers to the small, one-off purchases that are not on contract with existing vendors. These purchases are typically low in value, but they can add up quickly and have a significant impact on a company’s bottom line. Managing tail spend can be a time-consuming and labor-intensive process, as it often involves multiple stakeholders, decentralized purchasing decisions, and a lack of visibility into spending patterns.

This is where tail spend automation comes in. Tail spend automation is the use of technology to streamline and automate the procurement process for tail spend items. By leveraging automation tools such as artificial intelligence, machine learning, and robotic process automation, companies can gain greater control over their tail spend, reduce costs, and improve overall procurement efficiency.

One of the key benefits of tail spend automation is cost savings. By automating the procurement process for tail spend items, companies can leverage technology to identify cost-saving opportunities, negotiate better pricing with suppliers, and consolidate their tail spend under preferred vendors. This can lead to significant cost savings over time, as companies are able to reduce maverick spending, consolidate their purchasing power, and optimize their overall procurement strategy.

In addition to cost savings, tail spend automation can also improve process efficiency. Manual procurement processes can be time-consuming and error-prone, leading to delays, bottlenecks, and inefficiencies. By automating the procurement process for tail spend items, companies can streamline their workflows, reduce manual intervention, and improve process visibility and control. This allows companies to focus their resources on more strategic initiatives and value-added activities, rather than on mundane, administrative tasks.

Furthermore, tail spend automation can enhance compliance and risk management. By centralizing and automating the procurement process for tail spend items, companies can enforce compliance with corporate policies, identify and mitigate potential risks, and ensure that all purchases are made in accordance with company guidelines and regulations. This can help companies to avoid costly penalties, legal disputes, and reputational damage, while also improving overall governance and control over the procurement process.

Another benefit of tail spend automation is enhanced data visibility and analytics. By automating the procurement process for tail spend items, companies can capture and analyze valuable data on their purchasing patterns, supplier performance, and cost-saving opportunities. This data can be used to drive strategic decision-making, optimize procurement strategies, and identify trends and insights that can inform future purchasing decisions. This can help companies to make more informed and data-driven decisions, improve overall procurement performance, and drive greater value from their supply chain.

In conclusion, tail spend automation offers a wide range of benefits for companies looking to optimize their procurement process and drive cost savings. By leveraging technology to streamline and automate the procurement process for tail spend items, companies can reduce costs, improve process efficiency, enhance compliance and risk management, and gain valuable insights from their data. Ultimately, tail spend automation can help companies to unlock hidden value in their tail spend, improve overall procurement performance, and drive long-term sustainable growth and success.

The time to prioritize tail spend automation is now – don’t let your company’s tail spend go unnoticed and unmanaged. Embrace the power of technology and automation to optimize your procurement process, reduce costs, and drive greater value from your supply chain.