World-class organizations today have a good level of control over most of their cost structure. As this visibility and
control increases, eventually a point is reached when the effort required to go further appears to be greater than the
benefits. At this point, a number of challenges arise:
Poor data visibility,
Lack of effective controls,
Little market leverage,
Low potential savings,
Lack of interest from other stakeholders, and
Lack of category expertise in the very high number of categories remaining.
Organizations often find it difficult to define and execute a unified approach which allows them to get their arms
around this last portion of sourceable spend. Traditional strategic sourcing approaches need to be flexed and made
more resource-efficient, whilst technology and transactional procurement processes also have a critical role to play.
Attempts to address this challenge have led to the appearance of a new vertical within Procurement departments:
“Tail-spend Management” (TSM). In challenging economic conditions, where CFO’s are leaving no stone unturned
in the quest for cost reduction, TSM is becoming a hot topic in medium to high maturity procurement organizations.
Categories: Whitepaper
SRC Type: Sourcing Management