“The taming of the tail is tedious and that’s why it’s overlooked in many organizations beyond whatever a catalog can address. There are only so many strategic sourcing professionals, there are only so many projects they can handle, and only so much spend they can get under strategic management. After that, beyond what’s in the catalog, IF there is a catalog, it’s typically the wild wild west for Procurement — especially if it fits on a credit card or P-card. There just isn’t enough bandwidth to manage more than a measly modicum of the tactical tail in an average organization.

Many organizations believe it’s okay to ignore tail spend because it’s only 20% to 30%, and because they believe that overspend probably can’t be that high on small purchases. They’re wrong on both points. In most organizations, even when the strategic categories are defined to include 80% of spend, because products and services change all the time, organizational buyers and / or overworked sourcerers won’t always catch when new products or services should be included in a strategically managed category; and because p-card/T&E is never included in the initial estimate, tactical/tail spend that’s unmanaged is usually 30% to 40%. If it’s 40% that ends up being unmanaged when the expectation is 20%, that’s a lot. Secondly, spend analysts and tail spend analysts have regularly found that the average overspend in the tail is in excess of 10%, with some categories of spend routinely being in the 15% to 30% window because no one ever looks at it. And if your organization is losing out on 10% of 40%, that’s 4% that could go straight to the bottom line with a good tactical tail spend solution.” (…)

You can read the full article here.