Our Approach to Tail Spend Management

Understanding Tail Spend

Tail spend is characterized by its high volume and low individual value. It’s the 20% of spend that involves 80% of a company’s suppliers. This segment of spend is frequently unmanaged due to its fragmented nature and the perception that it’s too inconsequential to warrant attention. Often left to individual departments to manage and report on, tail spend can feel like the untamed West, with limited controls and little ownership. However, when aggregated, tail spend can represent a significant leakage of financial resources and a missed opportunity for cost savings and process optimisation.

The Challenges of Tail Spend Management

Managing tail spend is fraught with challenges. The sheer volume of transactions, coupled with a lack of visibility and control, makes it difficult for procurement teams to effectively monitor and manage this spend category. Without a strategic approach, organisations can suffer from inefficiencies, maverick spending, and compliance risks.

Why Ebit Stands Out

Ebit, a leader in intelligent procurement, understands the intricacies of tail spend management. We offer a comprehensive suite of services that address the unique challenges of tail spend. Their approach is not just about cost savings; it’s about delivering value through business improvement, innovation, and sustainable cost reduction strategies.

Ebit’s Tailored Solutions

Ebit’s solutions are tailored to the specific needs of each client. We leverage market intelligence and data to provide insights that drive informed decision-making. Our approach enhances spend visibility, enabling your business to track and control their tail spend effectively. Moreover, Ebit’s consultancy services ensure that the right strategies are implemented, aligning procurement activities with your overall business objectives.

The Benefits of Partnering with Us

Partnering with EbitIp for tail spend management offers several advantages:

Expertise: Ebit brings a wealth of experience and knowledge, ensuring that best practices are applied to manage tail spend effectively.

Visibility: Their solutions increase the visibility of tail spend, allowing for better monitoring and control.

Cost Savings: EbitIp’s strategic approach to procurement delivers tangible cost savings without compromising on quality or service.

Risk Mitigation: By gaining control over tail spend, organizations can reduce the risks associated with unmanaged spending.

Efficiency: EbitIp’s managed services streamline procurement processes, freeing up internal resources for core business activities.

Conclusion

Tail spend management is a critical component of strategic procurement. It requires a dedicated effort to bring this unmanaged spend under control. Ebit stands as a valuable partner in this endeavour, offering the expertise, tools, and services necessary to transform tail spend into a source of value and efficiency for businesses. By addressing the challenges of tail spend head-on, Ebit helps unlock potential savings and enhance procurement functions and efficiency, proving that even the smallest spend categories can yield significant benefits when managed intelligently.

For more information on how Ebit can help your organization manage tail spend and drive procurement excellence, visit their website4 or contact them directly to discuss your specific needs. Embrace the opportunity to optimize your procurement strategy and make every penny count with Ebit’s intelligent procurement solutions.

Tail Spend Delivery

Here are a couple of examples of how we have helped clients manage their tail spend;

Retail client

  • This fast-growing online retailer had a large, fragmented supplier base that had grown with it as it expanded across Europe. Through a supplier rationalization project, Ebit delivered savings of 19% and reduced 45 suppliers down to one. Additionally, benefits achieved included single-invoice, extended payment terms, and payment for stock on call-off rather than up-front
  • After speaking to stakeholders and visiting sites to view stock, Ebit identified inefficiencies such as delivery delays. This was leading to stockpiling issues, which was bad for cashflowcash flow.
  • After discussions, the chosen supplier also managed stock and volumes to aid demand management. They delivered on a next-day basis to give confidence in the supply chain.
  • SLAs and commercial terms that were put in place. These incentivized the supplier to deliver great service and benefit from future cost reduction achieved

Manufacturing client

  • Ebit saved seven figures with a tail spend management project
  • Ebit increased spend consolidation, leveraged existing contracts, and mandated 60-90 day payment terms.
  • The procurement process was future-proofed through the implementation of a new triage process to funnel demand based on spend, improving governance.
  • Procurement was added as an approver for all PO’s over a certain value. A new principle of “no PO no pay” is being applied to all suppliers.
  • A senior Director was appointed as an escalation point in order to create a “psychological gate” to discourage unnecessary spending

Contact us to find out how we could help your business too.

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