In a recent episode of the Sourcing Industry Landscape podcast, titled “Mastering Tail Spend’s Hidden Potential: Insights from Kearney and Simfoni“, guests Yves Thill from Kearney and Stefan Dent from Simfoni engaged in a thought-provoking discussion about a critical yet often overlooked aspect of procurement – tail spend management. Hosted by Dawn Tiura and powered by SIG (Sourcing Industry Group), these insights offer a fascinating perspective on why addressing tail spend is not just necessary, but potentially transformative for businesses.
The Overlooked World of Tail Spend
Stefan Dent, Co-Founder and Head of Strategic Alliances at Simfoni, encapsulated the core issue: “Tail spend is really difficult to get your arms around, to see the spend, let alone influence it.” His observation highlights a pervasive challenge in procurement – managing low-value, high-transaction volume spending that usually goes unmanaged. This part of spending, though constituting a smaller percentage of total expenditure, involves a vast majority of suppliers and transactions, making it a complex beast to tame.
Why Tail Spend Matters
Yves Thill, Partner and Global Leader of Procurement at Kearney, emphasized the significance of tail spend management. He points out that while this segment might represent less than 20% of the total spend, it accounts for a whopping 80% of suppliers. The complexity and lack of visibility in this area poses challenges and opportunities, highlighting why organizations can no longer afford to neglect tail spend.
The Consequences of Neglecting Tail Spend
Ignoring tail spend can have severe implications. As Thill rightly notes, “Procurement organization[s] only have so much [in terms of] resources, bandwidth, and management attention.” The strategic oversight of tail spend often leads to missed opportunities in savings, efficiency, and supplier risk management. This oversight isn’t just a missed opportunity; it’s a latent risk.
Read More:- Download the guide to Tail Spend Management
The Potential for Transformation
Dent and Thill also discussed the transformative potential in harnessing tail spend. Innovative tools now offer unprecedented visibility into this segment, allowing organizations to capitalize on what was once considered too difficult to manage.
The strategic Kearney-Simfoni partnership signifies a robust approach to tackling the complexities of tail spend. By combining Kearney’s strategic expertise with Simfoni’s technological prowess, the partnership aims to unlock the hidden potential of tail spend, transforming it from a neglected area into a strategic asset.
Organizations need to adopt a more holistic approach to procurement, one that recognizes and leverages the strategic value of every dollar spent, no matter how small. These insights shed light on the critical need for organizations to rethink and retool their approach to procurement, emphasizing the untapped potential of managing tail spend effectively. As Dent succinctly puts it, “Tail spend has been the problem child left on the side.”
Watch: SIG podcast episode with Stefan Dent and Yves Thill.
Tune in to this compelling discussion for a deeper dive into why mastering tail spend is not just a necessity but a strategic imperative in today’s complex procurement landscape.