Tail Spend Procurement Definition
Tail spend procurement is the process of identifying, managing and reducing the cost of indirect and low-priority spend.
Indirect spend is defined as any expenditure that is not directly related to the production of goods or services. This includes expenses such as office supplies, travel, marketing, and IT. Low-priority spend is defined as any expenditure that is not essential to the company’s core operations. This includes expenses such as entertainment, gifts, and employee perks.
The first step in tail spend procurement is to identify all indirect and low-priority spending within the company. This can be done by reviewing past expenses and conducting a spends analysis. Once all spending has been identified, the next step is to categorize each expense into one of three categories: discretionary, necessary, or wasteful.
Discretionary spending is defined as any expenditure that could be reduced or eliminated without impacting the company’s core operations. Necessary spending is defined as any expenditure that is required in order for the company to maintain its current level of operations. Wasteful spending is defined as any expenditure that does not provide value to the company or its employees.
After all spending has been categorized, the next step is to develop a plan for reducing or eliminating discretionary and wasteful spending. This can be done through a variety of methods such as negotiating better rates with suppliers, implementing Spend Management Solutions , or instituting policies that limit or prohibit certain types of non-essential spending.
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