Taking a more strategic approach to tail spend management

For many organizations, tail spend is simply a part of doing business. Defined as the 20% of procurement spend with 80% of suppliers, tail spend is often unpredictable or painful, due to the lack of visibility as well as inefficiencies.

Procurement teams may focus on regaining control and visibility over tail spend initially. However, by taking a more strategic approach to tail spend, organizations can drive efficiency, reduce costs, and improve their overall procurement strategy.

HAQM recognized this potential and embarked on a journey to harness their tail spend. The learnings they gained could serve as a valuable blueprint for organizations of all sizes seeking to be more strategic with their tail spend management.

1. Take a data-driven approach

Organizations need to analyze data to understand and manage tail spend more effectively. Procurement teams can discover purchasing insights and identify opportunities to reduce costs and improve the buying experience. For example, HAQM took insights from their tail spend data to optimize frequent tail spend purchases and develop more efficient and cost-effective supply solutions.

Investing in data analytics tools, such as Spend Visibility (a paid Business Prime feature), allows organizations to drive smarter buying decisions among their tail spend users and generate insights to inform their procurement strategies.

2. Integrate with dynamic and agile partners

Integrating new partners into existing e-procurement systems can make all the difference for the buying experience for your tail spend users. For instance, a fully integrated search experience simplifies finding and purchasing products, while administrators retain the compliance and control provided by their current e-procurement system.

HAQM integrated their existing procure-to-pay processes and systems with HAQM Business, allowing their procurement teams to guide tail spend users to HAQM Business for their one-off purchases, while maintaining visibility over spend.

Organizations should seek partners that facilitate seamless integration with their systems. By integrating with over 300 different third-party e-procurement, expense management, or iDP systems, HAQM Business enables organizations to provide a more seamless purchasing journey for their tail spend users. This promotes greater adoption among tail spend users, who can now conveniently access a wide selection of products from HAQM Business without leaving their spend management or e-procurement system.

3. Educate and train employees

To drive adoption of newly-established processes, procurement teams should focus on encouraging tail spend users rather than mandating the use of a preferred partner or supplier.

At the beginning of their journey, HAQM developed series of education materials, including onboarding training and timely email reminders. For instance, when a buyer submitted an expense for a purchase outside of established processes, they would receive an email reminder that highlighted the benefits of buying on HAQM Business instead.

Organizations should work with partners that will collaborate on implementation, launch plans, and internal communications. This alignment between both parties simplifies the transition, making it easier for tail spend users to adopt new procurement processes and purchase from their preferred partner.

Tail spend is always evolving

Managing tail spend does not start and end at the product level. It is essential for procurement teams to analyze their tail spend at the supplier and category levels, facilitating supplier consolidation and improving overall supplier management.

By effectively managing tail spend, organizations can gather the data needed to continuously streamline and automate procurement processes. Not only does this reduce administrative burdens for procurement teams, but also empowers them to focus on strategic initiatives that drive their organization’s key objectives.