Discover how embarking on a comprehensive digital procurement transformation helps organisations manage complex spend profiles. With shifting social and economic factors heavily impacting inflation across the UK, many organisations have experienced a fundamental change in corporate priorities. As the focus on corporate sustainability and environmental, social, and governance (ESG) responsibility increases, greater operational challenges are being placed on purchasing functions. Due to these expanding commercial demands, modern departments are continuously seeking fresh opportunities to enhance corporate efficiency and secure additional financial savings. This search explains why the systematic identification and control of unmanaged expenditure has been formally highlighted as a top three priority by global Chief Procurement Officers (CPOs).
What is Tail Spend Management?
Unmanaged expenditure is frequently regarded as the most problematic area of an organisation’s overall spend profile. In basic financial terms, this category often accounts for a large proportion of suppliers relative to spend value, in line with the typical 80/20 tail spend pattern. This environment consists primarily of low-value transactions alongside high-volume orders, and the layout is largely made up of non-critical, ad-hoc suppliers. This fragmented expenditure can span both direct and indirect purchasing categories.
The innate nature of this spend segment involves a highly disjointed supply base. Due to the daily transactional challenges and limited resources that corporate purchasing departments face, these low-value orders are rarely fully visible. A professional commercial function cannot manage or control what cannot be seen on the corporate ledger. Successfully executing structured tail spend management strategies solves this visibility dilemma by bringing dark purchasing lines into clear view.
Why should you look to control your Tail Spend?
When looking at the transaction value of a purchase of a product or service in isolation, it is such low value that it is unlikely to come onto the radar of the internal purchasing team. The real importance lies in looking at this unmanaged volume in a collective manner. Collectively, the total value and the resulting savings opportunity are highly likely to be of a much greater financial value than some of the standard ‘big ticket’ sourcing categories. This collection of micro-transactions represents the next major frontier for sustainable procurement cost optimisation.
In addition to the immediate savings opportunity, the nature of these smaller purchases means they are often managed directly by ‘local’ departments. Prices are obtained and orders placed by internal teams with little or no professional sourcing experience. Due to this decentralised approach, organisational risks around purchases being made entirely out-of-contract are commonplace. A distinct lack of regulatory compliance can also put your organisation at risk.
How can Barkers help?
At Barkers, we combine advanced data analytics with professional procurement expertise to deliver operational excellence for our clients. Senior members of our practitioner-led team are Chartered MCIPS, FCIPS, or equivalently qualified experts. Our consultants hold relevant Honours Degrees, MBAs, and PhDs based on rigorous research completed in areas relevant to the advancement of commercial best practice.
Our senior delivery resources come from a background of industry leadership with hands-on experience of leading and developing complex sourcing functions. The advice we share is based on years of hard-earned practical experience, meaning you can be confident that the methodologies we recommend will hit your corporate budget, timescales, and operational objectives.
We recognise that one size does not fit all, and this tailored perspective is certainly relevant when managing fragmented corporate spending. Our structural approach is simple. We work in close partnership with our corporate clients to:
- Identify and thoroughly analyse hidden spend profiles.
- Agree on the exact scope of work and commercial opportunity.
- Deploy our specialised ‘Procurement As A Service’ expertise to deliver rapid financial savings, vendor consolidation, and strict transactional control.
- Develop robust tail spend management strategies that will shape and manage future outbounds while mitigating the recurrence of expanding rogue spend.
- Manage these lower-tier supplier relationships on your behalf on an ongoing basis.
What are the benefits?
Due to the tailored way that Barkers works, alongside the deep expertise we maintain within our delivery team, we consistently deliver multiple commercial benefits for our clients. Specific to controlling smaller transactions, common achievements include:
- Enhanced structural visibility of your total corporate spend profile.
- Core financial savings that support broader procurement cost optimisation targets.
- Immediate, on-demand access to leading international purchasing professionals.
- Increased contract compliance and enhanced corporate governance.
- A dramatic reduction in the day-to-day administrative burden of smaller invoices.
- Achieving better economies of scale through aggressive vendor consolidation.
- Easing the management of compliance with strict company policies across the extended supply chain, including ESG, modern slavery, and living wage targets.
When an enterprise initiates a comprehensive digital procurement transformation, automating these low-value transactions acts as a primary catalyst for efficiency. Incorporating automated cloud frameworks within your operational workflows removes manual processing bottlenecks and allows your division to capture substantial hidden savings. Ultimately, modernising systems via an end-to-end online procurement transformation gives procurement teams the administrative relief required to enforce lasting tail spend management strategies. To learn more about our strategic approach, you can contact our team today to see how our specialists can streamline your workflow.