We’re releasing a series of articles to answer your questions about tail spend, starting with the basics so you understand what tail spend is and we’ll progress along the spectrum to help you manage it. To get up to speed, read our prologue and Chapter 1 on what this tail spend series will help you accomplish. In this chapter, we'll explore how to better communicate with stakeholders to get tail spend under control.
“Who purchased you and why?”
This is perhaps the most intriguing question and the right place to start when looking at tail spend. A spend analysis is often the first step in building a procurement capability, and if used on an ongoing basis, it can help to understand what spend consolidation efforts leave out. To accurately capture the full picture, analysis should pull in data from multiple sources, such as purchasing/payment systems, purchasing card data, travel and expense systems, and often multiple ERP systems, even petty cash if local branches still use it.
Fortunately, there are many helpful tools on the market that range from free-for-use apps to complex software platforms enabled with artificial intelligence (AI). Nearly all of these will help with generating what we call a “spend cube,” which is an analysis, at the line-item level, of global spend. This can include:
Amy Fong, Principal - Procurement and Purchase to Pay Advisory, The Hackett Group